Housing affordability grabs the headlines

Housing affordability and the Federal BudgetA full-frontal assault from all three tiers of government is needed to fix housing affordability – and that starts with stamp duty, says the Property Council’s chief of Policy and Housing Glenn Byres.As the May Budget brings with it a promised package of measures to address soaring house prices, housing affordability continues to grab the headlines.”It’s great to see an active conversation around housing affordability finally emerge – because it’s been a long time coming. But we need that conversation to evolve into a concrete plan for action,” Byres says.Last week, reports emerged that the Turnbull Government was working on policy options to cut the per cent capital gains tax concession for investors who have held an asset for a minimum of 12 months.While the Prime Minister told Question Time that his government has “no intention or plan to change capital gains tax or negative gearing”, options reportedly under consideration include halving the CGT discount to 25 per cent and introducing a phased model in which the discount would increase the longer the property was held. Byres urges the federal government to proceed with caution.”We have previously said the government could look at lowering the capital gains discount from to 40 per cent as part of broader tax reform – but that represents a tap on the hand break, rather than a yank.”However, if something is introduced that shocks the market in a savage way, we will potentially turn the tap off supply and not just damage the industry, but damage the economy as well- and we can’t afford to do that.”The number of dwelling approvals is only now meeting demand, after a decade of undersupply, Byres says.Instead, a “fundamental sea change” around planning systems will close the gap between supply and demand. Among the solutions are a “coordinated response” from all governments, and competition-style payments that can “act as an anchor to fix planning systems and improve housing markets”.Meanwhile, New South Wales Premier Gladys Berejiklian announced the appointment of former Reserve Bank governor Glenn Stevens to advise her on the issue of housing affordability.The latest Demographia Housing Affordability survey, released in January, found Sydney’s housing market is now the second least affordable in the world, trailing only Hong Kong’s.Berejiklian told Parliament a cross-government working group would formulate strategies to help first-time home owners enter the market.Byres welcomes Berejiklian’s commitment to housing affordability, but says that stamp duty is one of the largest levers at the state government’s disposal.”New South Wales has doubled its stamp duty receipts in four years, and is now pulling in $8 billion a year. If the Premier wants to make meaningful change that would benefit home buyers, then she should start with stamp duty,” he says.The same goes for the other states, Byres adds.”The WA Opposition has just announced its decision to repeat the silliness of foreign investor tax in New South Wales, Victoria and Queensland. And yet, most states are sweeping in revenue from stamp duty receipts.”If governments want to improve affordability then reduce the inhibitors to supply and address the price inflation due to property taxes.”