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The standing committee on taxation and revenue has heard that Australia’s current housing affordability issues are “categorically the most significant on record”.
Addressing the committee on Thursday, 4 November, Adrian Kelly, president of the Real Estate Institute of Australia, doubled down on the warnings the organisation raised in its recent submission to the federal inquiry into housing affordability and supply.
“Contrary to what some commentators might believe, the real estate industry is strongly of the view that the Australian dream of home ownership should be accessible to everyone,” Mr Kelly stated.
“We take no comfort in the current record prices we are seeing because they are primarily driven by a lack of supply,” he continued. “We would rather see ten buyers happily enter the market through the availability of ten suitable homes than ten buyers outbidding each other for one available home.”
In its official submission to the committee, REIA set forth three major issues it sees as exacerbating the current stress on the market, along with recommended methods of addressing them. Mr Kelly reiterated their position on Thursday, starting first with advocating for substantial tax reform.
“Stamp duty has been too often put in the too hard basket, and it would be great to see stamp duty reform front and centre of the committee’s findings,” he urged.
Other tax reforms would look at encouraging downsizing among older Australians, who are currently holding back from selling large family homes due to an inability to afford anything in the current market.
“This hesitation needs to be unlocked,” Mr Kelly said, noting that a recent report by the REIA examined several different ways to make better use of existing housing stock and encourage increased listings. “This includes looking at new policy levers to encourage rightsizing as Australia’s population ages.”
Next up, powering the building boom.
“New homes will need to be built,” Mr Kelly said, warning of the urgency of this particular issue. “This will need to be prioritised as Australia’s borders reopen and international immigration resumes. This is an area that will present an increasing challenge unless we plan for it now.”
And lastly, REIA advocates for the institution of a national plan for housing that addresses supply, affordability and tax reform. This would involve both state and federal governments and be tasked to a council of ministers whose success would be based on measurable outcomes.
According to Mr Kelly, at this point, the facts in the debate about housing affordability are clear, and action must be taken.
“There is a lot of quantitative data outlining the significance of the current market. My hometown of Hobart has now hit a median house price of $1 million. This is driven by Australians escaping the cities, interstate and international competition and a strong preference for houses over units or apartments.”
But he also posited that in addressing these challenges, the country finds itself in a moment of great potential.
“This is a huge opportunity to improve both affordability and supply across the board as we transition out of the current phase of the COVID-19 pandemic and kick-start the economy.”
On the same day as Mr Kelly’s remarks, the committee also heard from listings platforms REA and Domain, who raised concerns that the government’s home ownership grants inadvertently increase property prices.