Sep 3, 2013

Unsung policy issue: what will they do on housing affordability?

Here's an unfashionable issue you're hearing nothing about: housing affordability. But if you're a young person struggling to rent (or buy), it's a big one. Freelance journalist Farz Edraki brings you a policy summary.


Asylum seekers, the cost of budget promises, same-sex marriage ... with four days until the election, it seems like the same issues keep cropping up again and again while plenty of others go ignored. Housing affordability has received scant attention -- despite a recent Australia Institute poll finding that rent and housing was a top priority for young voters (second only to jobs). Sky-high house prices and tight, expensive rental markets are a particular problem for younger people -- and if they're trying to save money for a house deposit, rock bottom interest rates are a major obstacle. Crikey decided to bring you a policy summary. A quick survey of Labor's and the Liberal's key election policies doesn't yield much; housing isn't listed as a major priority for either. The Greens have emphasised it more. Renting-related issues are central to housing affordability, with one in three Australians renting properties (although it's the home owners who seem to get the media attention on issues like interest rates). Labor's National Rental Affordability Scheme offers financial incentives to build and rent houses in low-moderate income Australians. A Labor spokesperson told Crikey 10,000 new homes would be built by 2016 under the NRAS.  It’s estimated there would be 50,000 new homes in total under the scheme by 2016 ($4.5 billion has been spent on the NRAS so far). The Coalition has expressed cautious support for NRAS, while the Greens would like to fund a further 70,000 homes. The Greens have also promised 15,000 new homes through a "Convert to Rent" scheme, where empty properties would be renovated into low-cost rental properties. All major parties agree that the Commonwealth Rent Assistance package, which supports renters through Centrelink payments, should continue. Over 157,000 people receiving rent assistance payments use half of their income on rent. The Greens want rent assistance assessed against the median rental increase, not CPI. The Greens would introduce national tenancy standards to address inconsistencies in the existing state-by-state approach. And they’re proposing a $103 million national body to "set, introduce and oversee a new national standard that covers all rental tenancies" re issues like security of tenure, rent price stability, water and energy efficiency and protection for vulnerable groups. Landlords would be offered $500 per property to meet the new standards. On homelessness, only the Greens and Labor have directly tackled the issue. Labor has allocated $159 million for interim measures, while the Greens pledged to end homelessness by 2020, which would cost around $900 million -- $1 billion a year.

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12 thoughts on “Unsung policy issue: what will they do on housing affordability?

  1. Shaniq'ua Shardonn'ay

    “build and rent houses in low-moderate income Australians”, interesting.. is it a suppositories for the dole scheme?

  2. Peter Shilllito

    It’s not surprising. Both major parties have been committed to keeping the housing bubble intact whilst doing sweet fa to bring down the real culprit, the high cost of land. The main stream media meanwhile have been complicit by failing to ask the hard questions. Policies at all levels of Government have restricted and chocked the supply of affordable blocks/sections, while prime pumping demand with disgraceful tax breaks in favour of investors (both domestic and foreign) and at the same time extracting more and more tax out of the pockets of new home buyers. It’s a disgrace.
    Two minor parties however really do seem to get it (at least on the supply side). Family First and Bob Katter. I urge all to go on their sites and read their policies on affordable housing. At least they have one.

  3. Shaniq'ua Shardonn'ay

    I wish one of the parties would address negative gearing – at least to start winding it back.

  4. Nadia B

    Of course you wouldn’t consider Family First’s housing announcement would you you limp-wristed left-leaning latte-loafers (today’s rant brought to you by the letter L).

    And guess what the smart people at Macro Business had to say about it? http://www.macrobusiness.com.au/2013/08/family-first-talks-housing-sense/

  5. zut alors

    Agree with both posters above. Abolish negative gearing and patiently wait for the market to settle to more realistic average prices.

    Neither major party dares to rock the boat, it’s safer to pursue populist policy. Abbott is brazen enough to cut the schoolkids’ bonus which mostly impacts on lower income voters – he’s not game to upset asset-rich voters who own property in which they don’t live.

  6. Andybob

    Agreed Shaniq’ua. I saw John Hewson talk about this recently. He also thought that revenue losses on investments in excess of income should be quarantined as deductions off the CGT on any ultimate capital gain, and not allowed as deductions against personal exertion income. That is the position in the USA and our unduly generous treatment of such losses is distorting the housing market.

  7. CML

    I refuse to accept there is no way that Labor could get rid of negative gearing, without dire consequences for the party. After all, few of these ‘asset-rich voters who own property in which they don’t live’ (thanks zut), vote Labor anyway.
    Why doesn’t somebody bring in a graduated scheme, perhaps ‘grandfathering’ those now in receipt of this rort, and at the very least, only allow negative gearing on NEW housing, to increase the overall housing supply. But anyone now in this situation, along with future investment property owners, should only be permitted to negative gear the income/costs related directly to the housing involved – NOT any other income.
    And for good measure, the CGT should be returned to it’s original level of 100%, on all GAINS from investment housing – in increments over the medium to long term. That way the government would have more money to invest in housing stock to assist those who will NEVER be able to buy their own home.
    Why hasn’t this even been thought about, let alone talked about?

  8. Shaniq'ua Shardonn'ay

    @Nadia – Family First only talks about ‘opening up the land’. Which is a great idea until you factor in the costs of building the additional infrastructure – roads, transport, utilities. Then it doesn’t look so cheap anymore.

  9. Observation

    I would think to abolish negative gearing would cause quite a shock. Imagine the people out there who have leveraged on this with two, three, four investment properties. My guess is there would be a flood of these houses on the market as they would not be able to afford to keep them.
    Then property prices would possibly fall by 10-20%. And the cheaper housing would fall the most being the most likely to have been investment properties. Now we are getting into first home buyers affordability range. Then hopefully the house prices will stay there for five to ten years or so while inflation for everything else catches up.
    But who will be the big losers?

  10. tonyfunnywalker

    The suppository was the Howard – first home owners grant which was both rorted by buyers and Estate Agents alike.

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