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{{propApi.successMessage}} {{region}} Change locationReserve Bank Assistant Governor gets it right on housing
Reserve Bank Assistant Governor gets it right on housing
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“New home building is racked by a structural undersupply of new greenfield and infill land, inefficiencies and delays in planning regimes and development approval processes, skilled labour shortages, construction cost escalation, and the aftermath of the most rapid interest rate hiking cycle in a generation,” added Mr King.
“Unfortunately, Asst Governor Hunter missed the opportunity to talk about punitive taxes on new housing,” stated Mr King.
“New housing is one of the most highly taxed and regulated sectors in the economy along with sin taxes of tobacco and alcohol. Taxing housing only contributes to fewer homes being built, rents to increase and home ownership to decline.
In 2019, the HIA commissioned the Centre for International Economics (CIE) to compose a research report- Taxation on the Housing Sector. The research and report identified that in Sydney, it’s estimated that of the total outlay made to acquire a new house & land package in a Greenfield estate, only 50 per cent of this outlay reflects resource costs. The other 50 per cent is made up of regulatory costs, statutory taxes and excessive charges.
“Any government policy changes to reduce taxation of new housing will greatly benefit housing affordability and will undoubtedly boost the supply of new housing.
“Asst Governor Hunter correctly asserted that there are major structural causes at play in the severe undersupply of new housing. ‘Underlying demand for housing, whether people rent or own their own home, is fundamentally determined by the size of our population and the number of people that live (on average) in each dwelling.’ This appears self-evident, but some government agencies continue to fail to understand this concept.
“Ms Hunter also indicated in her presentation that estimates of underlying housing demand sit somewhere between 260,000 to 320,000 homes per year. This stands in stark contrast to the National Housing Supply and Affordability Council’s finding in its State of the Housing System 2024 report, that underlying demand is currently around 230,000 and will later moderate to approximately 174,000.
“The NHSAC fails to accurately quantify and project underlying housing demand- failing to account for real income growth, changing demographic profile, an ageing population, an increasing share of one-person households, increased urbanisation and a number of other factors that are all likely to alter the dwelling mix.
“In its Housing Australia’s Future report, under varying real income scenarios, HIA estimates that Australia’s future underlying housing demand sits within the range of 227,826-249,585. This is a significantly larger volume of demand than the Council’s forecast ‘stabilized demand’ of approximately 174,000 in the year of 2024-25 and beyond.
“Asst Governor Hunter’s statement that the housing crisis ‘will not be a quick fix’ is both timely and carries a high probability rate,” concluded Mr King.
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