Shuffling the deck chairs of housing affordability
Great to see both contenders for this Saturday’s election have released policies aimed at giving first home buyers a ‘leg up’ into the market. Neither party though seems to be proposing any ‘watershed’ solution for the major hurdle to affordability – supply. The Real Estate Institute of Australia estimates our national undersupply this year alone is 20,000 homes. And household numbers are growing much faster than the population (with divorces, later marriages, oldies living longer etc). So in the major growth areas like inner-Brisbane a shortage of properties means buyers and tenants alike are really feeling the pinch.
Each of the Coalition and Labor has announced “home saver account” schemes to give first time buyers a tax-benefited way to save for a deposit. There’s some neat ideas in each of their proposals: under 18’s for example can get $1000 inside their birthday card from Mum or Grandad, and the grown-ups get a tax deduction for the account contribution. And if a parent co-purchases with the first-timer their portion would be Capital Gains free when the home’s finally sold (or the kids buy them out). As agents it all looks good to us!
But as Treasurer Pete says “If people with more money were just chasing the same number of houses, the price of the houses will go up.” The Property Council’s done some great work analysing how to improve the supply of homes (see www.affordablehome.com.au ) and they’ve rightly highlighted the massive infrastructure costs borne by each new home buyer. It might be more politically acceptable to load developers with costs rather than increase general taxes or rates. But the reality is that end purchasers wear these costs, and this drives prices up and supply down. Each new building must cover its own water, sewerage and other direct works. But as a community we need to ask if we expect buyers of new properties in our inner city to fund the upgrading of surrounding footpaths and roads and libraries and parks?
According to the Property Council the infrastructure costs on a new Brisbane apartment have risen 500% over the past 11 years. That’s government putting its hand further out for contributions to local amenity, and more often than not they’re amenities the whole community makes use of every day. Add in the new minimum standards for housing with requirements like water efficiency items, fire safety requirements and increased sound attenuation – all needed but adding to the cost. Then tip on other government fees and charges, and new properties have a whopping built-in cost – even before the buyer pays their stamp duty. As a community we need to ask if we really do want to improve housing affordability, and allow more of our population to own their own home. If so we need our governments at every level to wind back the recent increases in new property costs, and share the burden across all tax payers. Hardly an election winner is it?!
We’d like your view – should indirect infrastructure costs be paid by new property buyers or funded out of general taxes? Tell us what you think!