Housing affordability: Property Council of Australia says cranking up supply will help home buyers
A new report by the Property Council of Australia has today pointed to dwelling undersupply as a major hindrance to housing affordability, along with other obstacles such as stamp duty.
With the Federal Budget announcement only two weeks away, the industry body has urged the government to leave negative gearing alone and instead fix the housing crisis with its “10 Point Plan”.
The Chief Executive of the Property Council of Australia, Ken Morrison, said that negative gearing is “an established tool that can contribute to a deep pool of rental properties”.
Instead of making changes to the existing tax concessions, Morrison indicated that the real solution to housing affordability was continued investment in supply.
“For twenty years we have had a logjam of costly regulation, poor planning decisions and excessive taxation across all levels of government. This has driven up construction costs, impeded supply, and resulted in the dramatic increase in house prices in our major cities.”
"Australia is benefiting from population growth, record low interest rates and relative economic prosperity, but getting so many other policy settings wrong has made affordability worse,” he said.
RBA Governor, Philip Lowe seems to have similar sentiments to Morrison, stating in a parliamentary speech back in February that "the supply-side has had trouble keeping up with strong population growth, housing prices are still rising quickly.”
Other recommendations in the Property Council’s 10 Point Plan include improving public transport infrastructure, re-establishing the National Housing Supply Council to help with policy-making and abolishing stamp duty.
Based on Mozo’s stamp duty calculator, the tax on home buyers doesn’t come cheap in Australia, as those who purchase a property at the median house price in Sydney are required to fork out at least $48,740 before mortgage registration fees and transfer costs kick in.
The Property Council’s 10 Point Plan to fix housing affordability:
1. Crank up housing supply, diversity and choice
2. Make housing cheaper to produce
3. Incentives to spur reform
4. Bridge the deposit gap (by rolling out “Keystart” around Australia, a WA government program that issues low deposit home loans to eligible applicants)
5. Remove barriers to downsizing
6. Don’t play with negative gearing
7. More choice for renters (in the form of targeted incentives such as longer-term leases)
8. Location matters (make cities more liveable)
9. Phase out stamp duty
10. Measure the market (bring back the former National Housing Supply Council)
While we’re beginning to see the end of record low home loan rates here at Mozo, our database shows that all it takes to nab a variable rate as little as 3.39% is a little shopping around. If you’re ready to refinance or buy your first property, stop by our comparison hub.