We need real solutions to improve housing affordability

| April 26, 2017

The push for a quick way out of the housing affordability crisis is attractive but unrealistic. Cheryl Thomas from the Property Council of Australia says we must build a strong, long-term approach that supports the implementation of solutions on both the supply and demand side.

Avocado on toast, tax incentives, baby boomers, inclusionary zoning, superannuation – the housing affordability issue is nothing if not diverse.

The myriad of issues and stakeholders means the issue is often caught up in a tit for tat debate; who is to blame, where does the answer lie, how can this be solved?

The push for a quick solution is attractive but unrealistic.

We know housing affordability is a major problem – we are concerned when we think about the options our children may have for housing in the future and the fact that a house may cost 15 times the average salary.

The strategic vision for the state from bodies such as the Greater Sydney Commission focusses thinking around the issue, but how can we ensure the vision is translated into a logical, fair, considered approach and good long term outcomes for NSW?

Part of the answer is housing supply. It’s economics 101 – if we have enough supply to meet demand then subsequent issues will be rendered obsolete.

We can start improving supply by looking at the planning system and ensuring it’s optimised to meet growing demand. Let’s look at where we can make inroads now and so that new housing is injected into the system in the next twelve months. Code assessment, which enables new homes to be ticked off and built quickly, is essential for medium density housing and apartments and must be adopted immediately.

We also need key infrastructure to unlock land. Homes cannot be built without electricity, water or sewage so we need a coordinated approach to providing this key infrastructure so homes can be built on new land.

But we must also ease the pressure on home buyers by taking a long, hard look at stamp duty as a part of wider tax reform. First home buyers can get an exemption from stamp duty – but only on properties valued up to $650,000 – all but useless when the median price for a home in Sydney is $1 million.

The NSW Government could do two things tomorrow. Firstly, they could revise the threshold for stamp duty concessions that are currently available to first home buyers.

Secondly, the archaic stamp duty tax brackets should be brought up to date. On the current scale, more than 50 per cent of properties in Sydney are being slogged with the highest rate of stamp duty.

But let’s not stop there – we must build a strong, long-term approach that supports the implementation of both supply and demand side solutions.
We need to boost the Housing Acceleration Fund by at least $500 million. The fund, designed to support the building of new homes but currently stuck in third gear, must be boosted to support essential infrastructure to new housing developments, assist in collaborative approaches towards greater housing supply and assist councils to fund strategic planning expertise and work towards the strategic aims outlined in the Greater Sydney Commission’s District Plans.

These are the real solutions needed to ensure future generations can afford a home in NSW.

Housing Affordability Online Consultation:

Q: What can be done to improve housing affordability?