Housing is a fundamental need and human right. Perversely, homes are now treated as an investment asset by governments rather than a shelter in which to live and/or raise a family. Full 'background' below.
Australia should achieve greater housing affordability for first home buyers and renters, whilst conserving Australia’s built heritage and striving for relatively stable house prices.
Policy Methods (Federal)
To help achieve this Australia should:
- Remove the 50 per cent discount of capital gains tax on taxable Australian property (non-principal place of residence).(1)
- Abolish negative gearing on taxable Australian property.(1)
- Phase out provisions allowing Self-Managed Superannuation Funds to borrow for investment in real estate.
- Lower housing demand via a sustainable population with lower immigration (see SUSTAINABLE POPULATION & IMMIGRATION - AUSTRALIA policy).
- Restrict the purchase of Australian residential property and land for residential development to Australian citizens, longer term (5 year) permanent residents, and minimum 75 per cent Australian-owned entities.
- Increase Foreign Investment Review Board scrutiny of and penalties for breaches of foreign purchase rules.
- Restrict bank lending practices to better control the supply of housing credit, including the banning of interest-only housing loans and those above a loan to value ratio (LVR) of 90 per cent.
Policy Methods (State)
To help achieve this States should:
- Encourage developers to include an element of social or affordable housing in new projects.
- Increase investment in public housing.
- Reform tenancy laws to offer greater renters’ rights including;
- Longer standard rental tenure;
- Longer notice for eviction;
- Greater ability to keep pets;
- Greater ability to make minor renovations including picture hangers;
- Removal of ‘no-fault’ termination from residential leases so that tenants have more security and stability. This will mean there will only be four situations in which a tenant can be removed from their home: 1) sale of the property, 2) major renovations, 3) failure to meet tenancy conditions including rent payments, or 4) Owner wants to move in to their property.
- Increase state taxes on foreign purchases and foreign ownership of residential land/property as follows:
- 10% stamp duty surcharge (above standard rate);
- 10% annual land tax (current owners would have this phased in over 10 years);
- 10% annual vacancy tax (on property’s full capital improved value).
- Broaden land tax over at least 10 years to replace property stamp duty reliance, ensuring that;
- Owners that have paid stamp duty on their current owner-occupied home are not required to pay land tax on that property;
- The total future land tax payable (over the average home ownership period) is comparable to the present stamp duty requirements (adjusted for inflation).(2)
- Expand existing anti-money laundering legislation (Anti-Money Laundering and Counter Terrorism Financing Act 2006) to accountants, lawyers and real estate agents to help prevent foreign and local crime-related money from entering the real estate market.
- Abolish first home buyer grants when the above Federal and State policies are implemented.
- Ensure that our population growth–fed 'urban renewal' and infill is not at the expense of our built heritage, backyards and urban amenity.
- Also see JOBS & ECONOMY policy (regarding the importance of a more diverse economy).
- This would only relate to capital gains and negative gearing after the policy comes into legislation. Capital gains and negative gearing made before the legislation could still be discounted. (NB: More stable housing prices would make negative gearing far less attractive, as the end goal of a large investment property capital gain would likely not eventuate. Capital gains is therefore the most relevant tax policy issue to address).
- This would both improve housing affordability for first home buyers and provide a more sustainable and efficient revenue base for State government budgets.
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Housing is a fundamental need and human right.
Dearer residential property and land does not create national wealth. It simply creates a society of haves and have-nots, increases the cost of living and doing business, and retards the capacity of individuals, families and banks to invest in wealth-generating small businesses and other economic enterprises. This collectively starves the broader Australian economy of capital.
See further expert commentary in MacroBusiness article: ‘It’s housing that’s killing productivity’: CLICK HERE
Importantly, we have a one-off opportunity to stabilise Australia’s population, and still ensure a sustainable housing industry with healthy construction opportunities over several decades. But we must act now if we are to transition the construction industry to a sustainable footing.
Under our policies, Australia would still grow from its present 25 million to stabilise at around 26-30 million by 2050. We have inbuilt growth in the system due to natural increases (excess of births over deaths) being currently at around 150,000 per year. This will add up to 3 million over the next few decades before stabilising by 2050. At an average of 2.6 people per household in Australia, that growth still requires well over 1 million houses to be built – or around 10 Canberras! Also, due to extreme housing unaffordability, many adults are sharing or living with parents and others, but could create a new household to be constructed if affordability improved via more stable house prices.
Further, an ageing population is also an economic opportunity for housing construction, estimated to require an increase in one-person households in NSW alone of around 70 per cent, or 260,000, by 2040. That would extrapolate to another 1 million homes nationally.
Finally, if housing (land) affordability improves, people will have more money to spend on improvements (architecture, painting, landscape gardening, etc). This will all keep the housing construction industry busy, while shielding them from the ever-increasing business costs (including road congestion) that come with population growth.
With Australia’s population still growing and ageing, under our policies we will still need much more housing. This is a once-off opportunity for a sustainable transition and to protect the industry and broader economy from a very big construction crash down the track.