SOLUTION TO HOUSING CRISIS IS STUPIDLY SIMPLE
Commonsense isn’t the only thing in short supply when it comes to our major parties’ plans to address the housing affordability crisis
AM I just a genius or are our politicians just stupid? Let’s go with both.
Our property crisis has officially become ground zero in the election battlefield, with Scomo promising access to superannuation for first-home buyers and Albo suggesting the government become an equity partner in homes for low-income workers.
Both are desperately searching for a solution to the problem of housing affordability.
But what our major parties are proposing just ain’t it.
It all comes down to simple economics: supply versus demand. We have a shortage of the former and an excess of the latter.
Yet what both Labor and the Libs are proposing will only increase demand by bringing more buyers into the market.
The Coalition says it will allow first-home buyers to withdraw up to $50,000 from their super funds to go towards buying a property.
Workers will be able to withdraw up to 40 per cent of their super to a maximum of $50,000, but must have also saved 5 per cent of their deposit and must live in the property for at least 12 months. If the Coalition is re-elected, the scheme won’t start until July 1, 2023.
While the government’s own Superannuation Minister Jane Hume conceded that the
Super Home Buyer Scheme could drive up prices in the short-term, Scomo protests this will be balanced by his other property promise: allowing people aged 55 and above who are downsizing their primary residence to contribute up to $1.6m into superannuation.
This, he says, will increase supply by shifting Gen X-ers out of their single-family homes.
But he forgets the other part of this equation … if Gen X sells, they must then buy. They don’t just disappear from the market.
Which means, yet again, more demand.
Similarly, Labor’s equity scheme that would allow lowincome workers to have the government cover 40 per cent of the cost of a new home and 30 per cent of an existing home will add more heat to the market.
But even if demand were to remain steady, or even drop, it’s no solution to the issue of helping Aussies own their own homes without breaking the bank.
And experts agree. Property Council CEO Ken Morrison told Sky News this week that a lack of supply, which neither party has put enough focus on, would have an impact.
“The government’s own official forecast shows housing supply is set to drop by a third just as population growth is about to renormalise and take off again,” said (the other) Mr Morrison.
“That is where we don’t want to be as a country, where we’ve got falling supply and rising demand. That’s a bad place for housing affordability.”
Instead of attempting to essentially artificially manipulate demand in the market, all levels of government should be working towards increasing supply.
Why not offer subsidies to build a granny flat or dualliving accommodation for existing homes? Why not subsidise the renovation of existing single-family homes into duplexes? It not only increases supply but supports
our construction industry.
Why not reduce the very cost of buying and selling homes?
As Steven Hamilton from the Australian National University states: “State government stamp duty discourages turnover, which prevents better housing matches, driving up prices. Exempting the family home from federal taxation and the assets test for the pension does the same, discouraging downsizing.”
Further, he says increasing housing supply means not just building more houses but building the right kind of homes in the right locations.
“On that, devolving decision making down to the street level, as proposed in the
United Kingdom, is a promising idea,” he says.
And funnily enough, that is precisely what the City of Gold Coast is doing with its Station Neighbourhood concept plans, which allow residents around light rail stations to inform future planning. It’s microplanning for a macro city. And its goal is to increase supply without over-development.
The solution to the property crisis doesn’t take a genius or a miracle. It all comes down to a commitment to increase supply.
And maybe I’m just stupid, but I simply don’t understand why we can’t make that happen.
If Gen X sells, they must then buy. They don’t just disappear from the market