Property Council urges more urban land, low-deposit loans in housing affordability plan
Nobody can repeal the law of supply and demand so what the rising prices clearly reveal is that supply is not keeping up with demand. And that is so. With Australia taking in a couple of hundred thousand immigrants in every year, something like a couple of hundred thousand new houses need to be built. Because of the slowness of local councils to release more building land, that is not happening. Councils are the choke point. But how anybody can squeeze their balls remains to be seen
The lobby group representing property developers has unveiled a "10-point plan" to boost housing affordability in Australia's major cities, urging an increase in the availability of urban land, a system of low-deposit home loans and incentives for older home owners to downsize.
The Property Council, which has been a high-profile opponent of Labor's proposals to curb negative gearing and capital gains tax concessions, has released its plan two weeks out from the government's budget, which will outline a suite of housing affordability measures.
Released on Wednesday, their plan reiterates the council's opposition to negative gearing reform, and calls for an increase in housing "supply, diversity and choice" through a strategy that increases the amount of land for new homes supported by infrastructure in capital cities.
It wants charges and "red tape" to be reduced to make it cheaper for property developers to build, incentives for states to reform competition policy, risk-assessed low-deposit loans for owner-occupiers, the creation of "built to rent" housing, and the phasing out of stamp duty.
The low-deposit loan scheme would be based on Western Australia's Keystart program, which has been accessed by 85,000 people and results in fewer defaults than the market average, according to the Property Council.
The council also suggests boosting the supply of fit-for-purpose retirement living, and protecting some surplus cash from the pension-assets test.
Winding back stamp duty, the group said, would make the tax system more efficient and increase economic growth.
Average dwelling prices were 6.9 times average wages in 2016, up from 4.3 times average wages 15 years ago. In 2001, it took 85.9 per cent of the average household income to pay for a home deposit. This rose to 138.9 per cent in 2016.
"For 20 years we have had a logjam of costly regulation, poor planning decisions and excessive taxation across all levels of government. This has driven up construction costs, impeded supply, and resulted in the dramatic increase in house prices in our major cities," Property Council chief executive Ken Morrison said.
"Our plan seeks to support housing construction, broaden housing choice, reduce unnecessary construction costs, incentivises the states to undertake planning reform, induce institutional investment in new rental stock, and help first home buyers bridge the deposit gap."
The report outlines lagging supply, strong population growth, monetary policy, strong employment levels, low inflation, low interest rates and increased competition in the mortgage market as drivers of house prices.
Mr Morrison said negative gearing underpins the rental market and warned the government to "tread carefully otherwise it runs the risk of undermining the flow of jobs and investment throughout the economy".