From The Real Estate Conversation.
Treasurer Scott Morrison has spoken of his commitment to home ownership as an achievable goals for Australians in a speech for the Australian Housing and Urban Research Institute today.
He said the government is looking at new ways to help renters and fund affordable housing, but he said negative gearing will stay.
“Home ownership is a positive for the Australian economy, our society and the nation’s finances,” said Morrison, but he said that recent data shows home ownership is declining in Australia, especially for young people.
The data shows that the proportion of home owners has fallen from 71 per cent of Australians to 67 per cent over the past 20 years. For Australians aged 25 to 34, home ownership is down by almost 10 per cent between 2002 and 2014, and currently sits at around 30 per cent.
Morrison said, “That is more than 160,000 young people that would otherwise be homeowners.”
Laying the foundations for the upcoming 6 May budget, Morrison said Labor’s proposal to change negative gearing tax breaks will not help Australians hoping to buy their first home, because it will increase rents, making it harder to save for a deposit.
Morrison said renters need greater security. He said that over 85 per cent of private renters move within five years, and almost one third of moves are forced, which is three times the rate of other household arrangements.
Morrison said, “This is particularly concerning for families with children.
“These families need housing stability to have consistent, reliable and beneficial access to the services they rely on such as schools, medical assistance and other supports.
“This means access to longer term leases,” he said.
Morrison said the federal government could establish an Affordable Housing Finance Corporation that would use a “bond aggregator” model that has been successful in the UK, and which is aimed at garnering tens of millions of dollars in investment into community and social housing.
Morrison called on state governments to release greater supply of land, to alleviate some of the housing supply shortages.
Glenn Byres, Chief of Housing and Policy for the Property Council of Australia, said the Treasurer’s highlights the complexities in dealing with the housing and rental markets.
“We agree with the Treasurer’s assessment that the rental market is working well, but the housing supply pipeline in our cities is not,” he said.
“Housing supply across Australia is hindered by government property taxes and charges, unnecessary red tape, and planning systems that were built to constrain growth rather than facilitate it,” said Byres.
He said the Government is right to be looking at ways to kick start private investment in Australia’s housing markets, saying “the private sector is ready, willing and able to help.”
“The Federal Government should also be looking at ways to incentive the states and territories to encourage new housing supply using national competition payments,” suggested Byres.
Byres agreed with the Treasurer about the delicate balance between negative gearing and the rental markets.
“‘Negative gearing disruption’ is about making housing investment less attractive which will, in turn, impact the rental market,” he said.
“We believe there is scope, as part of broader tax reform, to reduce the capital gains tax discount to 40 per cent in the May Budget,” said Byres.
Mr Byres said the Treasurer was rightly focused on increasing supply through more investment and addressing supply constraints.
Nicholas Proud, chief executive officer of PowerHousing Australia, the body representing 28 Community Housing Providers, has welcomed Morrison’s commitment to address affordable houing shortages.
Helping new supply, creating more social and affordable housing, supporting first home buyers, and helping seniors to downsize are all step in the right direction, he says.
Adopting the UK’s bond aggregator model will open streams of institutional funds to increase the supply of social and affordable housing, said Proud.
“While public housing has decreased by 24,000 since 2007, community housing in Australia has over the same period grown from 33,526 to 72, 410 dwellings as per the recent Productivity Commission Report on Government Services,” said Proud.
“Providing funds through to the community housing sector will deliver more affordable homes more cost-effectively and assist those on low incomes through to first home ownership with more options,” he said.
To read the Treasurer Scott Morrison’s speech in full click here.
