Consumer News

Solution to housing affordability

6 March 2017

By John Cunningham – REINSW President

Housing affordability is the hottest topic in parliament and at dinner parties across Sydney, but behind all the conversations is there a solution?

The NSW premier Gladys Berejiklian has made housing affordability her number one priority and the Prime Minister Malcolm Turnbull says we’re at crisis point.

However there does not appear to be any attempt to engage with key stakeholders to find out why it has happened, what the problem is and how to fix it.

To the property industry, in Sydney and NSW in particular, it is obvious. For years there has been declining to record low interest rates and no rate rises to cool the market.

There has been a drastic undersupply of new housing caused by taxes and excessive stamp duty which had led to many sellers making home improvements instead of forking out fees to move.

The first home buyer tax concessions are limited to new dwellings and at such a low threshold very few people benefit. Convoluted and outdated planning laws also discourage creative development which are exasperated by the repeal of the dual occupancy laws.

Then there’s an increasing population through migration and business growth, and limited housing choices for an ageing population.

As a result, people are staying longer in their homes creating the buying frenzy for limited choices, which affects economic activity along with supply.

So how do you fix housing affordability? It will take a lot more than concessions on single issues, but every cause is where you find the solution.

The planning system in NSW is under review, but it will take years to have an effect so the government needs a quick solution to bring supply to the market.

The best way to achieve this is to bring back a revised form of dual or multiple occupancy for medium density living. This can be applied fast and will result in many benefits to first home buyers and retirees.

The government then needs to create meaningful stamp duty concessions to help first home buyers find housing more affordable, and give retirees the incentive to move to more appropriate housing.

Housing affordability is a big problem and will require creativity along with strong resolve and action.