Solution to housing shortfalls requires buy-in from all governments

Solution to housing shortfalls requires buy-in from all governmentsHousing affordability was a major topic for discussion by federal, state and territory treasurers at last week’s Council on Federal Financial Relations meeting in Canberra.Federal Treasurer Joe Hockey announced that Victorian Treasurer Tim Pallas would head up a working group looking at housing affordability.Following the meeting Mr Hockey said, “We had a further discussion on housing in Australia and we are particularly alarmed at the inability of young people to be able to access the housing market in a way they previously have been. We had a fairly detailed discussion about how we can increase the supply of housing stock and quite clearly there is work to be done.”Property Council chief executive Ken Morrison said it’s encouraging to see government recognising new housing supply as critical to easing price pressures and opening up opportunities for Australian homebuyers.”Decisive action by all levels of government is required to remove roadblocks to growth and reform current tax and planning systems to bring onto the market much-needed new housing supply,” Morrison said.”It is excellent to hear that Treasurers have engaged in a detailed discussion on how to increase the supply of housing stock. We welcome their recognition that there is more work to be done here and the announcement that a working party has been formed to take this forward.”Nationwide we have seen a 7.5 per cent increase in house prices in the year to March, [and] Sydney has seen double-digit growth of 13.9 per cent.”The primary reason for this growth in prices in Sydney is a decade of undersupply – we simply haven’t been building enough houses to meet demand – and this has put huge upward pressure on prices.”Chronic undersupply is only now starting to be addressed, with building approvals hitting record highs. However, supply is still an issue, with Sydney alone facing a shortage of some 190,000 homes within 10 years.”Housing affordability is not a problem that will fix itself; all governments must take responsibility for progressing reforms to boost supply and address what is a growing concern for Australians.”The Property Council proposes a five-point housing supply plan encompassing:· Tax reform. The federal government’s tax discussion paper rightly took aim at the detrimental impact of current tax arrangements on Australia’s property market, with stamp duty singled out as one of the worst, most inefficient and growth-inhibiting taxes. This debate must be progressed, and state and territory governments need to be key contributors.· Zone more land for housing. Our capital cities need more inner-city density, middle-ring renewal, as well as new land releases.· Planning reform to make it cheaper to produce new housing. New developments attract a range of taxes and charges, complex building rules and slow assessment processes that just force up base prices.· Infrastructure. Strategic delivery of new road and rail links brings more housing closer to jobs, which, in turn, will open up economic opportunities and deepen labour markets for business.· Incentivising reform. The federal government should consider kickstarting reform to bolster housing affordability by reaching a new competition agreement with the states, with incentive payments for achieving best-practice planning reform.For more on the Federal Financial Relations meeting click here