Home Ownership Inquiry and Housing Affordability

Home Ownership Inquiry and Housing AffordabilityHousing affordability is now one of the highest priorities for the community and it is important that federal policy makers adopt a position of national leadership on this issue. Last week, RDC made a submission on behalf of the Property Council to the House of Representatives’ Inquiry into Home Ownership, urging the Federal Government to take a greater role in this crucial area. Despite record levels of housing approvals (218,000 in the year to May 2015), high levels of housing commencements and completions and record low interest rates, many Australians still suffer from unacceptable levels of housing stress. ABS household formation statistics show that 164,000 households are being formed each year from 2011 to 2016. This number is expected to climb to 172,000 per year from 2016. Even though the current approvals and commencements figures look robust, a mere 153,000 homes were completed per year for the past decade. This means a significant deficit of housing in Australia. Despite the planning reform undertaken in various jurisdictions over the last decade, Australia has a significant lack of housing supply, both in terms of the volume of dwellings being delivered, but also the type and location of housing supply. The Property Council’s Housing Affordability Plan which will be finalised in late 2015 comprises the following five key policies, which are the basis for the policies outlined in the submission to the Inquiry: Zone more land for housing – our capital cities need more inner city density, middle ring renewal, as well as new land releases. Simpler planning, faster processes – new developments are hampered by complex building rules and slow assessment processes that just force up base prices.Tax the production of new housing less – the production of housing is a highly taxed activity. Stamp duties, land taxes, GST and large development levies can make up as much as 26% of the total cost of a finished house, and up to 21% of the total cost of a finished apartment. To make housing more affordable we need to tax the production of housing less.Link housing and jobs – strategic delivery of new road and rail links will bring more housing closer to jobs, which in turn improves people’s lives, opens up economic opportunities and deepens labour markets for business. Incentivise reform – the Federal Government should consider kick-starting reform to bolster housing affordability by reaching a new competition agreement with the states, with incentive payments for achieving best practice planning reform. As per House of Representative Committee rules, the submission will be available following its publication on the Inquiry’s website.