CEDA Housing Australia report a wake-up call for policy makers
The Property Council of Australia has welcomed the release of the CEDA Housing Australia Report.
“This report is a wake-up call for Australian governments and another reminder substantial supply side reforms are required to address housing affordability,” said Ken Morrison, Chief Executive of the Property Council of Australia.
“Policies that mean housing can’t be provided to meet our growing population or that push up the cost of new housing have to be tackled.
”We don’t agree with every conclusion drawn, but there is no doubt that this is a substantive piece of work that reinforces the arguments the industry has made over a long period of time.
“The report, by many of Australia’s leading academics, makes the point that Australia’s planning systems need a dramatic shake-up so that the supply of housing can meet our growing population. This is at its most acute in our biggest cities, and Sydney is the worst.
“The report is right to point out that when housing supply, housing affordability and job needs are out of kilter, the economy suffers.
“Developing better planning and funding models that link new developments and transport infrastructure are vital, otherwise we will continue to see a growing mismatch between jobs and where people live.
“As the report rightly points out, low interest rates and an end to credit rationing by lenders has resulted in a worldwide lift in asset prices, but the key is to get planning right.
“That means policies that allow our cities to get denser as they grow and still provide the land release they need.
“We see this most clearly when we compare our two biggest cities. Melbourne’s home prices are 30 per cent cheaper than Sydney’s despite the fact that it has been growing a lot faster. Melbourne has simply done a better job in planning for its growth.”
Mr Morrison said that the report found that negative gearing was only a small part of the housing equation but that the capital gains tax discount could be lowered.
“The CEDA findings are entirely consistent with the industry’s position. Policy makers would be better served focusing on changes which would make a real difference to housing affordability rather than those that won’t.”
Mr Morrison said it was pleasing that CEDA had identified the need for stronger downsizer incentives to be put in place and the importance of aligning planning and infrastructure in our cities.
“There is a clear need to remove blockages to people wishing to ‘right-size’ their housing, including for older Australians.
“The pension asset test is one such blockage, as is the huge stamp duty transaction costs associated with moving house. Too many older Australians are financially trapped living in houses with three, four and five bedrooms at the same time as many younger Australians are priced out of the market.”
Mr Morrison said he took issue with the finding that the market encouraged housing lots to be drip fed to builders and questioned the comparisons to the United Kingdom.
“The industry is arguing for more supply, not less. More supply will put competitive pressure on prices and it’s the planning blockages that too often hold this back.
“The situation in the UK is very different. According to the recent UK Government’s Housing White Paper, 60 per cent of all their new housing is provided by just 10 companies. The Australian housing market has a multitude of suppliers that all contribute to a vibrant and competitive market to build new housing.
“Where we do see opportunity to learn from the United Kingdom is the development of a ‘build-to-rent’ asset class to encourage significant new investment in housing supply.”
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