Change of government won’t address structural problems in Aussie housing market, experts claim By Aidan Devine
An ALP victory in the upcoming federal election would fail to deliver a substantial change in the fortunes of home buyers, according to the head of one of the country’s top buyer’s agencies.
BuyersBuyers co-founder Pete Wargent said a change of government could improve affordability at “the margins” but would likely do little to significantly reduce issues around housing affordability.
This was due to structural problems in the housing market, including an over-concentration of the Australian population within Sydney and Melbourne and, to a lesser extent, Brisbane, he said.
A Coalition victory would also mean little in the way of major reform on the housing affordability front, Mr Wargent said.
He added that the upcoming election was different to the last one in that Labor’s proposal to scrap negative gearing was no longer on the table.
“The 2019 election defeat was a shock for the federal opposition, and this was clearly reflected in the decision to drop its previously promoted reforms to negative gearing and capital gains tax,” Mr Wargent said.
“But housing affordability is likely to remain a key tenet of the election campaign, and measures taken to cool housing demand could make a marginal difference to affordability over time.”
Mr Wargent said a Coalition victory would deliver more of the same.
“If the Coalition is returned in government, then we can most likely expect no major changes, but Labor have made some interesting proposals with regards to affordable housing, and at a later point of time could choose to target investors which would in turn dampen housing demand,” he said.
The ALP has said it will release proposals ahead of the election. It had previously recommended a suite of measures, ranging from introducing a tax on vacant properties and the creation of an affordable land register.
There was also the promise to establish a $10 billion Housing Australia Future Fund to build low-cost houses and affordable dwellings for frontline workers, which would deliver 30,000 social and affordable houses over the first five years.
“These policies will likely make a difference to housing affordability at the margin, and in specific cases, such as for certain key workers, but generally speaking it’s the policies targeting demand which tend to have a bigger impact on affordability, rather than measures taken to build new supply,” Mr Wargent said.
EXPECT THE STATUS QUO IF COALITION WINS
Doron Peleg, co-founder and CEO of BuyersBuyers, said the incumbent government’s housing policies have mainly focused on the First Home Loan Deposit Scheme to help first homebuyers into the market, and the HomeBuilder package.
“Both policies have been remarkably successful in what they set out to do,” he said.
“First homebuyer commitments have run as high as we’ve seen since the Rudd first homebuyer stimulus through the financial crisis, and the next Census appears fairly likely to record a surprise increase in the rate of homeownership.”
Mr Peleg said the HomeBuilder stimulus was also successful in keeping the construction industry operational through the worst of the pandemic.
The Australian housing market faces two major challenges, he added.
“The first is the overall weakness in the creation of high-paying jobs outside Sydney and Melbourne,” he said.
“The other issue is a chronic undersupply of family-suitable housing, particularly freestanding houses in areas with good proximity to the major employment hubs.
“Overall, there is a known lack of integrated planning and co-ordination between the federal, state, and local governments to solve this puzzle. The problem is particularly noticeable in the middle ring suburbs, resulting in the ‘missing middle’ and an insufficient supply of medium-density townhouse projects.”
“This issue is also unlikely to be resolved in the near future. When we add to that Australia’s migration policy that will impact the demand for properties in the major employment hubs, then the issue is here to stay.”
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