Answer to housing affordability challenge is housing supply

AUSTRALIA needs supply not demand focused solutions to address our national affordability challenges, said the Housing Industry Association.

“Attempts to remove demand for new housing will reduce supply, affordability and jobs,” said HIA’s deputy managing director Graham Wolfe.

While several measures announced today by Labor to address Australia’s housing affordability challenges provide a sensible approach to increasing supply of new homes, others targeting demand will have an adverse impact on affordability now and into the future.

“We can’t address housing affordability nationally with both eyes solely on Sydney and Melbourne,” Mr Wolfe said.

“Sydney house price increases have been driven by many factors, including significant population growth, a ten-year supply recession, low interest rates and the impact of extremely high stamp duty costs on sales in the established housing market.”

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We can’t address affordability nationally with both eyes solely on Sydney and Melbourne. — Graham Wolfe

The dynamics in Perth, Adelaide, Northern Queensland and Darwin are very different, he said.

Foreign investors and self-managed superannuation fund investors cannot be blamed for the recent fall in house prices in Perth and Darwin, or the slower level of new housing activity in Adelaide.

Inflicting demand side measures on these capital cities ignores the significant negative impact on housing supply, jobs and economic growth in these economies.

“Right now, if foreign capital investment in Australia helped bring significant residential development projects to commencement in Perth, creating jobs and production, the Western Australian economy would be much better for it,” Mr Wolfe said.

“Australia needs a credible land planning body to provide national monitoring and forecasting of future land release and housing requirements. The body would help to inform government policy on financing, infrastructure and demographics.

“Other policies to address housing affordability must include a reduction in the imbedded taxation on new housing, government funding to support infrastructure and reforms to address unnecessary planning delays in bringing new residential developments to market.

“Our national housing affordability challenge is complex, and necessitates a national ‘cost of housing’ inquiry to identify impediments to the supply of new housing. Such an inquiry would bring together the overlapping impact of regulations, taxes and barriers imposed by all three levels of government, and importantly, inform governments in developing cohesive, integrated and responsible housing reforms, measures and programs.”