The Real Estate Institute of Australia (REIA) has released bold suggestions to tackle the ongoing housing crisis and help more people get into the market.
In a submission to the National Housing and Homelessness Plan, the REIA has proposed measures including phasing out stamp duty, getting more rentals onto the market, encouraging home ownership and focusing on family investing as ways to make housing more accessible.
REIA President, Hayden Groves said phasing out stamp duty would help free up housing supply.
“Big picture reform like phasing out stamp duty, which would conservatively introduce an additional 4 per cent of listings back into the sales market; with broader ranging economic and societal benefits to be simultaneously achieved,” Mr Groves said.
“It was a broken promise with the delivery of the GST and now it’s a housing supply problem.”
The submission calls on state and territory governments to pilot immediate stamp duty waivers for rental properties purchased in high need areas, as well as long-term federal reform.
Mr Groves also said there needed to be a laser-like focus on helping Aussies into home ownership.
“Simply saying it’s too hard and ‘let them rent’ is a complete disservice to young Australians,” he said.
“We know home ownership is a hallmark of long-term prosperity and we must tackle this in the plan.”
The plan notes that there needs to be more options to help renters transition successfully to home ownership.
The REIA proposes continued roll-out of the Australian Government Home Guarantee Scheme, aggressive promotion of deposit building incentives like the First Home Super Saver Scheme as well as allowing first-home buyers to deduct up to $5000 per annum on their interest rate bill.
The plan also suggests encouraging owners of vacant properties back into the rental pool through mailing campaigns.
The plan also looks at promoting property investment to households not just superannuation funds.
“Australia’s residential property market is worth $10 trillion compared to superannuation, which currently sits at $3 trillion,” Mr Groves said.
“Our sector currently has residential rental assets under management are estimated to be $3 trillion, supplied by around 2.2 million Australian family investors.”
Mr Groves said The Australian Government and civil society stakeholders had put a lot of emphasis on institutional investment.
“This includes repeated suggestions that negative gearing should be phased out as an option for Australian households which would have the upshot of benefitting the big end of town like multinational corporations and the very super funds you are required by law to put your pay into,” he said.
“To make the plan effective, we actually need to look at the respective pools of capital and grasp that family investment will be critical in every way in achieving our housing goals by 2034.
“And ask the question: ‘How can we get more family investors into housing over the next ten years rather than less’?”
The plan also proposes policymakers consider the impact of Australia’s ageing population.
It said older Australians are typically discouraged from downsizing, because of stamp duty costs and a lack of supply.
The plan suggests, state governments consider offering stamp duty waivers on the purchase of smaller properties for a prescribed category of downsizers.
While the Australian Government needs to review taxation and cash flow incentives in the context of reducing holding periods and thus increasing housing supply for the market.
Lastly, the plan suggests developing a range of incentives, such as cashflow or instant asset write-offs, for vacant properties and short-stay rental providers to bring them back into the long-term rental pool.
Mr Groves said that much of the feedback on the plan is focused on the here and now rather than the nation building task we have ahead of us.
“The National Plan for Housing and Homelessness has been a standing policy of REIA since 2020 and kicking off work on it is a good first step as Australia navigates challenging global conditions,” he said.
“However, we must caution against a plan that only considers 2023 conditions.
“The demand side of Australia’s economy remains strong with inflation moderating from its peak in 2022, however the Reserve Bank of Australia has indicated that more rate raises will be made to contain inflation if necessary.”
Mr Groves said households have remained relatively resilient due to strong labour market conditions, however, nationally, home loans remain at their most unaffordable point since 2008 in terms of income to mortgage ratio.