What The Federal Government Needs To Do About Housing
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Australia is in the midst of a severe housing crisis and there are no solutions currently on the table at government level. The rental stocks have fallen to an all time low for residential accommodation. Meanwhile, the nation remains in the grip of a cost of living/high inflationary period. This is what the federal government needs to do about housing.
- Pause all migration into the country until the housing stock situation improves substantially. Bringing in a thousand new arrivals per day is crazy at this time. Record immigration levels into Australia are just making things worse.
- During high inflationary periods governments can do 2 things economically to improve the situation. Raise taxes and lower spending.
- I recommend imposing a new federal housing tax on the sale of every residential property in Australia over the value of $1 million. This will do a couple of things. Firstly, it will raise revenue which can be directly used for purchasing and building residential housing specifically for renting. Secondly, it will deter the sale of properties for investment reasons, which has been draining the stocks of rental housing for some time. Indeed, it may provide a further damper on property prices more generally. It will not be popular, but the housing market in Australia has been the elephant in the room for a long time now. It is dividing the nation into haves and have nots on an ever growing scale. It is bloating our economy with credit/debt liquidity at an unprecedent level. If inflation was measured on the residential housing market over the last 30 years it would be at some 362%.
- The Stage 3 tax cuts are a very bad idea, especially during a high inflationary time. These tax cuts must be postponed and/or amended to lessen their negative impact on the economy. Flooding the economy with billions of dollars into the hands of the wealthy will result in inflationary expenditure. Most likely on imported goods. They may, also, stimulate more investment buying of property, which will see property prices rising further.
- Encourage property owners to commit their properties to long term renting for residential housing by offering economic inducements and tax advantages. However, this must be long term and defined as such via contractual agreements.
- Improve the rights of tenants in Australia and stop allowing them to be treated like second class citizens.
- Governments could be actively involved in supporting landlords to improve their rental properties via special schemes, which would offset some of the costs over time.
It is time for the federal government to stop mouthing useless platitudes and get busy actually doing something to shift the slide into disaster for a third of Australians. Rents are killing people in this country and pushing many into poverty. Governments cannot go on looking after the wealthy at the expense of the propertyless. Housing is supposed to be about having somewhere to live, not a get rich quick national Ponzi scheme.
“But long before this inflation crisis, a similar phenomenon has been eating away at the value of the money we use to buy a home.
Since the early 1990s until recently, the average annual rate of inflation in consumer prices has been 2.5 per cent, so it may have felt like the value of our currency was relatively stable before the pandemic.
But the value of our dollar hasn’t been maintained in every market.
When it comes to the property market, it’s been obliterated.
Property price inflation has killed the Australian Dream of widespread home ownership for younger generations.”
https://www.abc.net.au/news/2023-04-16/inflation-and-house-prices/102227382
Robert Sudha Hamilton is the author of Money Matters: Navigating Credit, Debt, and Financial Freedom.
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