The Australian Dream: A Survey of Housing Affordability and Supply in Australia A report released by the Federal Parliament’s Standing Committee on Tax and Revenue has revealed the state of housing affordability and supply in Australia, suggesting key recommendations on how to improve.
The survey and report received a generally positive response from those in the real estate industry, with Real Estate Institute of Australia (REIA) President Hayden Groves saying an important factor is the recognition that shortages of supply are at the heart of the accessibility challenge.
“Many of the recommendations relate to planning and taxation at the local and state level, with some useful incentive-based ideas to help local and state governments improve density in established urban areas,” he said.
“Higher density always increases supply and, in turn, provides more affordable housing solutions in our cities and regions.”
The report covers housing affordability, housing planning and shortages, social and affordable housing, first-time buyer deposits, and taxes and charges.
Current federal tax laws and negative gearing were a focus of the report and address the issue of supply impacting affordable rent.
“If you discourage private real estate investment, supply is limited, which drives up rents,” Groves said.
Mark Hay Realty Group Director Mark Hay said the top recommendations were on negative gearing, interest rates and monetary policy.
“The report suggests that the focus should be on reducing the enormous cost of levies, taxes and compliance to bring both land and built forms to market faster and more cost-effectively,” said he declared.
“Some reports show that when first-time buyers buy an existing home, they save 40-50% of the purchase price compared to buying a new product.”
Mr. Hay said the purchase price of a new property is made up of costs that weigh on new buildings, ranging from federal taxes, such as the goods and services tax, to contributions from developers.
“By tackling these huge, unofficial regulatory taxes and fees and speeding up the process, we will significantly reduce affordability issues in Australia and, at the same time, speed supply to market,” he said. .
One recommendation is to replace the stamp duty with a property tax, indicating that it should be implemented over time.
According to the report, if states and territories implemented this change, it would increase housing turnover, remove an unnecessary barrier to homeownership and stabilize government revenues.
Mr Groves agrees that the stamp duty must go, but does not think replacing it with a property tax is a feasible way of doing so.
“We all know that the stamp duty limits labor mobility, has an unfair impact on certain cohorts of essential workers, limits real estate investment, adds years to home mortgages and blocks the supply of housing. appropriate with aging Australians,” he said.
“It is not possible to simply swap stamp duty with property tax, but a progressive or user choice system would work over time and provide a more reliable revenue stream to state governments. “
Mr Hay said most state governments did not want to tamper with stamp duty.
“Depending on how the switch from stamp duty to property taxes is implemented, it would be suggested that it would have an increased effect of bringing some people into the market without the heavy tax of stamp duty prepaid when settlement if spread more moderately over several years like a property tax rather than a huge upfront cost,” he said.
Mr Hay said it should be noted that the report also talks about the non-economic costs of the tranquility and harmony of owning and living in your own home.
“Especially in times of pandemic and global chaos,” he said. “The economic cost cannot be measured against the comfort, stability and harmony attributed to families owning their own homes in Australia.
“I think it’s very touching and humanizes a hugely important relationship.”