Think property prices have gone a little bonkers? You’re not the only one. Which is why a report with 16 recommendations to tackle housing affordability has just been plonked on pollies’ desks in Canberra. Today we’ll run through them for you (succinctly, we promise).
You might have noticed that property prices have skyrocketed over the past 18 months, to the point where a lot of first home buyers are now having real difficulties cracking the market.
So how is the government looking at addressing it?
Well, a House of Representatives committee (made up of both Liberal and Labor MPs) tabled a report titled ‘The Australian Dream’ in federal parliament last week outlining 16 ways to improve housing affordability and supply across the country.
Below, we’ve summed up all 16 recommendations for you, starting with a few of the report’s more eye-catching proposals.
Replace stamp duty with land tax
States and territories should replace stamp duty with land tax, the committee recommends.
This should be implemented over time, so that those who have already paid stamp duty, or recently paid it, don’t face double taxation.
The committee says this change would increase housing turnover, remove an unnecessary obstacle to homeownership, and stabilise government revenues.
In the meantime, a transition review is recommended and states and territories should adjust stamp duty brackets to redress decades of stamp duty bracket creep.
First home buyers to use their super as security for home loans
The Australian Government should allow first home buyers to use their superannuation as security for home loans, the committee says.
“Allow first home buyers to use their superannuation balance as collateral for a home, without using the funds themselves as a deposit, thereby expanding the opportunity for home buyers,” the committee says.
“This recommendation will therefore remove the largest barrier for home buyers; being the deposit.”
However, the committee warns this recommendation should only be implemented in conjunction with some of the other proposals on this list that increase housing supply.
“Otherwise, an increase in households’ ability to borrow would likely increase property prices,” they add.
Rent-to-own affordable housing
The Australian Government should implement schemes to encourage private sector partnerships to deliver rent-to-own or discount-to-market affordable housing.
“This will diversify the housing market as well as provide affordable housing options for low to medium-income earners, people experiencing homelessness, women escaping domestic violence, parents and children,” the report states.
The committee’s other recommendations
Increase urban density in appropriate locations: specifically areas well-serviced by under-used transport infrastructure.
Incentivise planning and property administration policies: provide incentive payments to state and local governments to encourage better planning and property administration.
Pay states and localities to deliver more affordable housing: grants could be in the form of cash or infrastructure.
Adopt recommendations from the Inquiry into homelessness.
Increase the supply of critical housing such as crisis housing.
Don’t mess with negative gearing: the committee recommends the Australian Government not change its current negative gearing policy.
Reform developer contributions: work with state and territory governments to reform developer contributions, so value-adding and in-demand infrastructure is delivered.
Review the build-to-rent housing market: in particular how it’s affected by current regulations and tax policies.
APRA to continue monitoring lending standards.
No changes to the RBA’s charter: ensuring that house prices are not a specific objective of monetary policy.
Up-to-date forecast data: implement ways to get more up-to-date forecast data on population, housing approval and completions.
Unlock new housing supply: concessional loans to infrastructure projects and community housing providers that will unlock new housing, particularly affordable housing.
Here’s the most important thing, though. You don’t have to wait for the government to get the ball rolling on the above recommendations to help you crack the property market.
For first home buyers, most states offer grants and stamp duty concessions/exemptions to help give you a leg up.
There’s also a number of federal government options back up for grabs from July 1, including the popular First Home Loan Deposit Scheme and New Home Guarantee initiatives, which enable first home buyers to make their home purchase four to 4.5 years sooner, on average.
That’s right – four years sooner!
So if you’d like to find out about ways to overcome housing affordability issues, get in touch today – we’d love to help you come up with a plan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.