Next up: Housing

The election driven policy agenda continues on today with housing. Labor have released a paper highlighting housing affordability (both owned and rented) as a growing problem and have outlined some ways they will tackle it if elected.

From my reading, this looks to be moving in a positive direction. First, front and centre are issues of regulation that might be causing house prices to be high or supply to be low.

The Commonwealth should also work with state and local governments to reform development assessment processes, which add to the cost of new housing through delays, disputes and inconsistencies in the application of local planning laws.

By streamlining development assessment processes and implementing a range of efficiency reforms, up to $1 billion may be saved in costs and time delays resulting from the myriad of complex and inconsistent development assessment systems.

This is especially the case when it comes to the provision of infrastructure services to open up new areas for development.

Second, there are moves posited to create links between superannuation and house mortgages; as housing purchases are a savings decision, this appears to be a good direction to move in.

Third, they want to promote shared equity schemes. I am a big supporter of this direction and, indeed, see it as a solution for some low income housing issues with the government owning the land and people building and owning the house. The scheme of tax credits also looks promising:

Tax credits against tax liability for investors who agree to charge below market rents is another way of reducing investment hurdle rates for investors. It creates an incentive to invest in constructing affordable rental properties or rental of established houses for below market rent.

So this paper is a good one, it highlights an issue and canvasses solutions. Just the sort of thing to stimulate debate.

[This post appeared in Crikey, 4th July, 2007]

3 thoughts on “Next up: Housing”

  1. Joshua,

    I’ve been thinking about housing affordability, and one idea I’ve come up with is this: the Government borrows in the bond market and gives $100k (or some other significant sum) to first-home buyers, but only if:

    (1) the housing is off-the-plan high-density housing (to actually promote new building stock without suburban sprawl);

    (2) the housing costing no more than $x per sq/m, based on some appropriate formula of average housing prices (to prevent the money being used to artificially inflate apartment sizes);

    (3) the housing must be owner occupied for 3 or so years (to prevent immediate rentals, much like the current first-home buyers grant); and

    (4) when the housing is sold (in whole or part), x% (or some other appropriate figure) of any capital gain must be repaid to the Government to fully compensate it for its borrowing costs.

    Obviously all the normal planning/building code rules would apply.

    Now this is all of 15 minutes thinking, so there must be something seriously wrong with this plan. Any chance of you enlightening me?



  2. Someone needs to define affordable. There’s lot’s off cheap houses (200K-300K) in Melbourne within 30km of the CBD, but you’ve got to be willing to drive everywhere – there’s no public transport. All of a sudden, running two cars starts to eat heavily into the household budget, and then your house isn’t so cheap any more. Releasing more land for development isn’t going to take away those running costs. Prices really a function of supply and demand – where it’s cheap to build is because no-one wants to live there.

    Let’s do a Zimbabwe, and mandate that house prices must be halved. That’ll fix the problem.


  3. I find this remarkable that Labor is commended for recommending that the federal government should have a role in convincing state governments to do something about housing affordability when Labor are in control in all states and territories. This is not only hypocritical but due to its recommendations to manipulate prices through the tax system it is a centralist, command economy position.


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