Call 1300 805 221or

Property Council unveils ten-point plan to fix housing crisis

May 8, 2017

AUSTRALIA’S peak property industry group has unveiled a plan to improve housing affordability, championing low-deposit loans for first home buyers, but warns against “playing with” negative gearing.

The Property Council of Australia’s 10-point blueprint, released less than two weeks out from the Federal Budget, talks about reducing construction costs, boosting supply and removing barriers to downsizing.

But it urges against pursuing changes to negative gearing or any other measures that purport to help with affordability but instead “act as a tax” on investment and supply.

“Negative gearing and the capital gains tax discount are essential components of the private rental market, as well as rational tax policy,” the Council’s report says.

“Retention of negative gearing — and carefully canvassing any changes to the capital gains discount — are essential to the continual supply of rental accommodation.”

It comes as a special Newspoll, taken for The Australian ahead of the budget, shows most Australians are in favour of reducing tax breaks for property investors.

Fifty-four percent of respondents to the survey said they would support kerbing negative gearing and reducing capital gains tax deductions for investors.

Support was high from Australians across the political spectrum, with Greens, Coalition and Labor voters all backing the plan.

The poll also showed there was little support for a proposal to allow first home buyers early access to their superannuation for a home deposit.

Young Australians aged 18-34 were the only group where a majority (52 percent) were in favour of the plan.

Labor has been pushing for the negative gearing and capital gains tax reforms, but it’s believed the Turnbull Government is still internally split on whether to include the changes in its housing package, to be unveiled in the May budget.

Fairfax Media reports the package could also include measures to make it easier for retirees to downsize the family home.

It’s reported downsizers could be given exemptions from a cap on the non-concessional annual contribution to superannuation, normally $100,000 per year if the top up is a lump-sum payment from selling a family home.

After weeks of speculation over what the budget might bring to ease housing affordability pressures, Malcolm Turnbull has attempted to tone down expectations despite a red-hot property market in Sydney and Melbourne.

The Property Council says costly regulations, poor planning decisions and excessive taxes across all levels of government have created a logjam for the past 20 years.

“Australia is benefiting from population growth, record low-interest rates and relative economic prosperity, but getting so many other policy settings wrong has made affordability worse,” its chief executive Ken Morrison said.

Dwelling prices have climbed to 6.9 times the average wage and it takes 139 per cent of an average household’s annual income to pay the deposit on an average house.

“This affordability cauldron has taken years to develop and it will take a concerted effort over many years to unwind,” Mr Morrison said.

The Property Council wants to investigate low-deposit loans for first home buyers based on their rental and work histories, as well as a rethink on downsizing rules that discourage pensioners from budging.

However, it points out 1.2 million rental properties are negatively geared and argues the tax breaks underpin the market.

“Housing is a $6 trillion asset class and government must tread carefully, otherwise it runs the risk of undermining the flow of jobs and investment in the economy,” Mr Morrison said.

“Too much of the housing affordability debate has misdiagnosed the problems, focused on measures that won’t do anything to fix affordability, or set out to blame scapegoats for political convenience.” The Property Council also wants to see institutional investment in “build to rent” housing, densities developed around transport hubs and corridors, and the abolition of stamp duty.

TEN-POINT PLAN TO FIX HOUSING AFFORDABILITY

— Crank up housing supply, diversity and choice

— Make housing cheaper to produce

— Incentives to spur reform

— Bridge the deposit gap — Keystart low deposit home loans

— Remove barriers to downsizing

— Don’t play with negative gearing

— Institutional investment in ‘build to rent’ housing to give more choice for renters

— Location matters — densities around transport hubs and corridors

— Phase out stamp duty

— Re-establish the National Housing Supply Council

(Source: Property Council of Australia)


Better Choice Mortgage Services is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this website. While the information contained within this website is periodically updated, no guarantee is given that the information provided in this website is correct, complete, and up-to-date. Although the Better Choice Mortgage Services website may include links providing direct access to other internet resources, including websites, Better Choice Mortgage Services is not responsible for the accuracy or content of information contained in these websites. Links from Better Choice Mortgage Services to third-party sites do not constitute an endorsement by Better Choice Mortgage Services of the parties or their products and services. The appearance on the website of advertisements and product or service information does not constitute an endorsement by Better Choice Mortgage Services, and Better Choice Mortgage Services has not investigated the claims made by any advertiser. Product information is based solely on material received from suppliers. Advanced Finance (Pty) Ltd t/a Better Choice Mortgage Services are not financial planners or accountants and we would encourage our clients to seek professional advice before acting on any a financial or taxation information in this news post.
Get Connected