The sustained growth in house prices in the major east coast metropolitan markets is creating a housing affordability crisis that can no longer be ignored by both state and federal political leaders, according to LJ Hooker’s CEO Grant Harrod.
The average house price now costs 12 times the average salary (20 years ago this was only four times) and with minimal real wage growth and massive house price growth, this is even greater in markets like central Sydney and Melbourne. The long speculated house price bubble in these markets has proven the opposite. Each weekend with fewer properties available for sale and a growing list of desperate buyers, pressure on getting a home has seen house prices continue to rise. And the very people responsible for dealing with this crisis, our elected politicians, are silent or otherwise tokenistic in their suggestions on ways to address it!
It should be a fundamental right for every Australian to own a home. It is this right upon which our nation has evolved. Our Governments makes decisions to send Australian to war zones but constantly skirt entering a debate around how we deal with a crisis that’s going to impact many generations of Australians to come. Maybe it’s because they, and particularly state governments, are the biggest benefactors of this housing affordability issue?
We’ve seen state government coffers swell with these punitive taxes on property; from stamp duty, to land tax, capital gains tax, development approval taxes and even legislating to increase their take of interest earned on property trust account funds. The Australian real estate sector is now the most taxed industry bar none.
What we do know about politicians is, when they don’t have an answer, they look for a distraction. Let’s stop this distraction and get on with developing real sound policies, so like generation past, future generations of Australians can enjoy a place they can call home.
We need to see a real concerted effort to deal with the chronic demand vs. supply problem in these major markets.
Let’s start by encouraging more families to establish their lives in regional centres by incentivising employers to relocate to these areas; it’s a long game, but it works, just look at the US.
Next, let’s liberate real estate stock locked up because it’s too expensive for a homeowner to sell their property (and buy their next home). With stamp duty making up the bulk of these costs it is time to change how this is calculated. House prices have risen in recent time in Sydney by 45 per cent, stamp duty costs have also increased by 45 per cent. The debate has been had, stamp is a highly inefficient and restrictive tax that is directly contributing to the rise in house prices in many markets, because the cost of change has become so prohibitive.
Next, we have to change the planning approval process; it’s failed in every aspect of encouraging sustainable development of housing stock to meet population demands.
Poor infrastructure is also forcing many to have to live close to CBD’s to avoid excessive travel, which in turn drives this insatiable demand for a home in these markets. Shame we haven’t seen more of the income generated through property taxes spent on improving infrastructure and public transport.
The solution is simple. We have to change the supply and demand characteristics of the real estate market. This is now a structural issue that requires real vision to fix. A good start is for the federal government to acknowledge this crisis and appoint a dedicated housing minister, whose sole responsibility is to address this housing shortage crisis by developing real policies with their state counterparts to fix all the constraints that currently sees housing demand outstrip supply in most major Australian property markets.