Aerial of suburban housing

Focus on housing

HIA has developed a 10-point plan for the next federal government to help address the nation’s housing issues.

Author

Kristin Brookfield

The upcoming federal election provides HIA with an opportunity to highlight to all parties the importance of the housing sector to the Australian economy and why home ownership matters more than ever to all Australians.

With most pollsters, including the Prime Minister, suggesting that the next federal election will be held in May, HIA has developed a new set of policy imperatives that we believe the next federal government should be focused on to support the housing industry and home buyers over the next term of government.

This year’s election will occur at a time when the housing cycle is slowing, taking the industry from a peak of 232,000 starts in 2017 to a predicted low of 183,000 starts in 2020. This reduction in work is significant for HIA members. It will also have an impact on new home buyers as the supply of new homes begins to shrink while population growth fuelled by immigration continues to create strong demand.

This housing cycle has seen supply and demand reach an equilibrium of sorts, with Sydney and Melbourne delivering the bulk of the 232,000 new homes delivered in 2017. But it’s important to recognise that Sydney and Melbourne are not the whole story and that the outlook in cities such as Perth, Darwin and Adelaide have been subdued for some time now.

This year’s election will occur at a time when the housing cycle is slowing

The major difference in this housing cycle has been the impact of apartment construction, with up to half of the new homes delivered being in multi-dwelling projects. While this has significantly boosted supply and offers a lower entry price for many first home buyers, it does not necessarily follow that people have been buying the house they prefer in the place they’d prefer it.

The federal election offers a chance to ask how the federal government can help to support the housing industry and new home buyers, in particular helping first home buyers achieve home ownership. To do this the federal government must recognise it has a role in supporting housing supply in all its forms – public, private rental and owner-occupied – and to recognise that home ownership matters for all Australians.

HIA’s federal election imperatives

This year’s federal election provides an important opportunity for HIA to remind all parties of the importance of the housing industry and home ownership to the Australian economy.

The HIA 10-point plan sets out a range of actions we believe an incoming federal government should be prepared to commit to, and work with HIA, to deliver over the next term of government.

1. Make housing a priority

As one of the largest industry sectors in the economy, housing must be a priority for the next federal government. The appointment of a federal housing minister to address housing supply in all forms of government is essential. Housing and land supply issues should also be a permanent item for discussion through the Council of Australian Governments (COAG).

 

2. Access to housing finance

As credit tightens and housing starts begin to decline, the importance of first home buyers of new housing needs to be recognised. Limits on lending through lenders mortgage insurance for home buyers with less than 20 per cent deposit add significant costs to the life of a loan with limited value for home buyers, particularly when default levels in Australia remain extremely low.

 

3. Reduce the tax on housing

The housing industry is the second most heavily taxed sector in the Australian economy, with up to 50 per cent of the price of a new house and land package being made up of federal, state and local government taxes and charges. While many taxes are transparent, many of the costs on housing remain hidden and ambiguous. These taxes need to be more clearly understood and cascading taxes should be eliminated.

 

4. Preserve independent contracting

Independent contracting underpins the operation and cost-effectiveness of the residential building industry. There has been much debate about the rise of the sharing economy and the potential need to make new rules to manage contracting. Business owners face confusion and costs in unravelling the many different definitions of who is a genuine independent contractor in federal and state legislation. Rather than more rules, industry needs a streamlining of definitions to provide clarity and allow good businesses to get on with doing business.

 

5. Protect investment in rental housing

Privately-owned rental housing makes up around one third of Australia’s nine million homes and provides much needed housing for those not ready – or able – to buy their own home, or not eligible for public housing. Negative gearing and capital gains tax arrangements underpin Australia’s long-term private rental market and have helped keep downward pressure on rents. It is essential that the taxation arrangements be retained.

 

6. Grow a skilled workforce for housing

A supply of skilled tradespeople is critical to providing the quantity and quality of new homes for the growing population. Government programs are essential to support apprentices and employers, to reduce complexity in training pathways and to support group training organisations to provide a guiding hand as young people enter the workforce.

 

7. Maintain strong immigration to underpin economic growth

Australia should promote and maintain a population growth rate sufficient to secure ongoing growth in Australia’s economic performance, workforce capacity, national productivity and standard of living. On this basis, caps and limits should be removed on skilled and business migration categories, and programs should be developed that allow ‘independent contractors’ to be recognised as skilled workers.

 

8. Manage land supply and housing data

Estimating how many homes Australia needs to build each year, where they are needed, and what type they should be, is a complex matter. While much of the responsibility falls to state governments, the role of a national housing minister to oversee housing delivery, monitor peaks and troughs, and coordinate infrastructure delivery, is critical.

 

9. Support the delivery of infrastructure for growing cities

State and local governments face difficulties in funding infrastructure to support housing delivery in our growing cities. The federal government can play an important role through city deals, and the National Housing and Infrastructure Financing Corporation to assist in funding necessary infrastructure for housing, and to remove upfront levies and charges on new home buyers.

 

10. Preserve affordability through housing codes

The National Construction Code provides an essential baseline for the construction of buildings in Australia and provides a community accepted minimum necessary standard for design as required by all legislation. However, pressure is increasing on the NCC to do more and to address energy and accessibility features that go beyond the minimum necessary. It is important that the code continues to be aligned with the regulatory principles that ensure housing remains affordable for all.

Family

Home ownership matters

Australia’s love affair with home ownership is stronger than ever.

Polling undertaken by JWS Research for HIA shows that 92 per cent of renters still aspire to own their own home, yet only 49 per cent feel they will achieve it.

These figures clearly show that Australians believe they have a right to own their own home. The same evidence shows Australians believe home ownership will make them more financially and mentally stable in both their younger years and in retirement.

In 1966, home ownership rates in Australia peaked at 71 per cent, supported by federal government action on housing and strong support for home ownership as an outcome to grow the wealth of Australians and the economy.

Today, home ownership rates have fallen to 67 per cent and with renters – young and old – not seeing themselves ever realising their home ownership dream, it is important that this federal election brings a focus to home ownership.

Despite recent improvement in housing affordability in some cities, there is always more that can be done, both at the federal and state level.

Housing affordability remains one of the three main concerns for Australians today.

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