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Treasurer plans for housing affordability

26 October 2016

Federal Treasurer Scott Morrison has announced the government’s commitment to getting more Australians into their own homes and making housing affordability an important policy focus. 

This includes potentially removing the residential land use planning regulations to eliminate the roadblocks to increase supply. Mr Morrison revealed his agenda at the Urban Development Institute of Australia (UDIA) NSW Luncheon held on 24th October 2016.

In his speech he said that in some regions of Sydney, median prices are as much as nine times higher than disposable incomes.

On the goal of improving housing affordability, Mr Morrison said: “We do not achieve that goal by embarking upon policies that will hit the housing market, lessening the value of assets that Australians rely upon, as our opponents would do with their effective abolition of negative gearing.

“Instead we must understand the core drivers of our housing market and armed with that knowledge lift more Australians into the market by way of effective policies that better improve housing outcomes.”

Supply constrained by planning regulation

Mr Morrison added that although Sydney, Melbourne and Brisbane have record supply – most of this is in the inner city apartment market which is only meeting a certain market demand.

He added that some of the constraints to better supply of housing, which would improve affordability, include: complex land planning and development regulation; insufficient land release; the planning, cost and availability of infrastructure provision; transaction and betterment taxes, public attitudes towards urban infill; and, for Sydney in particular, physical geographic constraints.

Mr Morrison said: “The government will be discussing with the states the potential to remove residential land use planning regulations that unnecessarily impede housing supply and are not in the broader public interest.

“This will be the strong focus of my discussions at the next Council on Federal Financial Relations that I will convene in early December.”

Crashing the housing market not the answer 

He admitted that purchasing a home is becoming harder for each new generation which in turn puts pressure on the rental market and social housing. 

He added: “Improving housing affordability right across the housing spectrum must be a key policy goal for governments at all levels, including the Commonwealth.

“You don’t address housing affordability by crashing the housing market or your economy. 

“Rather the objective is to have policies that mitigate the artificial inflation of asset prices, ensure that supply is not restricted from responding to genuine demand and that enable homebuyers, through their own efforts, to make more rapid progress to being able to enter the market.”

In aggregate, across the country, a 20% deposit on the nationwide median home loan is more than 100% of annual household disposable income.

Views from industry 

Stephen Albin CEO of UDIA

“We welcome the Hon Scott Morrison’s commitment today to work with the states to remove residential land use planning regulations, enabling more Australians to have the opportunity to own their own home or invest in their families’ future.” 

Grant Harrod, LJ Hooker CEO

Mr Harrod said that the average house price now costs 12 times the average salary, compared to four times 20 years ago.

He said the supply problem can be helped by encouraging families to establish their lives in regional centers by incentivising employers to relocate to these areas. Stamp duty also needs recalculating to liberal stock.

Wilhelm Harnsich, CEO of Master Builders Australia

“Master Builders strongly backs the Treasurer’s focus on the removal of inefficient land use regulations that restrict housing supply and put upward pressure on house prices.

“It is also important that the immediate policy response is to remove structural impediments to the building of more new and diverse range of housing stock.”