Wrong incentives in the housing system

| May 24, 2017

We live in a large country with lots of land and opportunity. AFG VG Group CEO Lindley Edwards says we need to make sure that housing is affordable for the majority and that every Australian can buy a reasonably priced house.


Firstly the incentives in the housing system are not conducive to first home buyers. The incentives in Australia are skewed to investors. In countries like the US the tax breaks on housing are on the principal family residence (mortgage to buy the home only), which makes sense as having reasonable cost housing is a basic human requirement. Therefore we need to limit tax benefits to investors and provide benefits to home owners, particularly first time buyers. If Australia is going to provide benefits to investors then they should be limited to a total portfolio dollar amount.

Secondly the add-on stamp duty and transfer costs to buy a principal house is prohibitive. I believe that stamp duty on principal residences should only be payable for houses in excess of the median average price.

Thirdly there needs to be a willingness to look at ways in which smaller houses can be built as dual occupancy – where there is a streamlining of approval process and red tape. Many studies show that housing footprints have become too large, with many households not using much of the space of their homes. Larger home are more expensive to buy with larger mortgages and more costly to maintain – to heat, cool etc and use more environmental resources. We need to champion really good design and architecture in smaller footprints that are cost effective in their building as well as beautiful to look at and easy to live in.

For me the other major issue is not just affordable housing, but affordable housing in areas with amenities, community infrastructure and transport access. Some of the other countries like Singapore and Scandinavian countries have come up with cost effective models that have mixed demographic housing and are designed to create communities. We live in a large country with lots of land and opportunity, and for the long term sustainability of our way of life we need to make sure that housing is affordable for the majority and that every Australian can buy a reasonably priced house.

Housing Affordability Online Consultation:

Q: What can be done to improve housing affordability?

 

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