The Housing Unaffordability Crisis

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By Michael Danby MP

 

It’s hard to determine exactly when the “Great Australian Dream” of owning a home became so hard to achieve. However, for many, the prospect of home ownership in Melbourne now must feel like more of a pipe dream.

Twenty years ago the average house in suburban Melbourne cost buyers three times the annual median income. Today prospective homeowners will need to find eleven times the annual median income before hoping to own a home. In today’s housing climate, the three times median income that would have seen you owning a home twenty years ago, is now little more than a deposit on a home.

According to the Australian Bureau Of Statistics 52.3% of Melbourne Ports residents are a part of the rental market, while Victoria’s rental rate is 28.7%. When you also take into account that a large volume of young people are also still living in the family home in order to save, housing affordability is an issue that is of particular concern to this community.

Fortunately, Labor has a plan to address this issue.

While the Liberal Party procrastinate and the Greens Party dither around with a list of “aims” and “principles” whilst avoiding any commitment, Labor is coming up with real policy solutions to make the “Aussie Dream” achievable.

One of the crucial parts of Labor’s policy is to finally address Negative Gearing. Put simply, Negative Gearing is a scheme allowing property owners to claim losses on rental properties as tax deductions on their regular taxable income. This was originally designed to increase investment in housing. In reality it now sees the taxes of those saving for a house ironically being used to fund an existing property owners ability to own multiple properties. Negative gearing is pushing up the price of the house they are saving up to purchase.

Labor is therefore looking to abolish Negative Gearing on existing properties, it will keep the scheme for new properties to encourage investment in new houses. This plan will enable continued investment while encouraging growth in the building sector, lifting the supply of new properties onto the market and helping to keep the prices down. Currently 97% of properties negatively geared were purchased from existing housing stock. Labor would like to see this investment shifted so it works to increase supply.

Another factor which sees investment lifting property prices is Capital Gains Tax (CGT) discount. This discount gave investors an advantage by providing a tax incentive for increasing investment. John Howard and Peter Costello increased the Capital Gains Tax (CGT) discount in 1999, however since then house prices have skyrocketed and the discount has been one factor in adding to property price rises. Labor understands that while investment in the housing market in essential, it should not come at the expense of first home buyers. By reducing the CGT discount, we will hopefully attract long term investors and reduce damaging speculation in the housing market. This will help stabilise house prices and provide renters with a more stability and certainty of tenure. 

 

 

 

 

 

 

 

 

 

 

 

For those who are struggling with rent whilst trying to save, they should know Labor also has plans to help keep rental prices down. Labor’s rental policy calls for the implementation of a Vacant Property Tax to stop investors from purchasing properties and leaving them vacant by ensuring there is increased financial incentive for leasing a property. Vacant properties take leasing opportunities off the market and put further pressure on rental prices. Increasing the number of properties available for rent will help keep rental prices at a minimum and make it easier for people to find housing.

Labor also understands that a housing policy does not only need to deal with new home buyers. There are many doing it tough on our streets that just need a roof over their heads.

While the Greens Party teamed up with the Liberals in Victorian parliament to block the Andrews government plan to increase social housing, the federal Labor caucus were announcing plans to boost homeless support and set up a Safe Housing Fund, for women and children forced to flee domestic violence, and for other community emergency accommodation needs.

The commitment by Labor to address the crucial issue of housing is not just hollow words or an empty slogan. That’s why another crucial part of Labor’s housing policy will be to have somewhere the buck stops.

Labor will reinstate a Federal Minister for Housing and Homelessness whose remit will be to coordinate every aspect of Labor’s housing policy. The Minister will also be in charge of re-establishing the National Housing Supply Council, which will provide an ongoing independent advisory body on boosting housing supply.

With housing affordability being such an important issue with Melbourne Ports residents, I have been a strong advocate for change within Labor’s federal caucus. I am confident that a Shorten government will have a positive impact on housing affordability while protecting investment.

In the coming weeks you will be hearing more from my office on this subject, however if you have any queries, please do not hesitate to contact my office for further information on 9534 8126.

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