national movement on housing affordability?

There are signs federal Labor might be prepared to engage on the crucial, but politically tricky issue of housing affordability in the lead up to the election. Reports today say they are “considering introducing a superannuation-style savings account to help Australians buy their first home

The Opposition says it is examining whether people should be able to use part of their pre-tax earnings to save a deposit.

Labor’s Housing spokeswoman Tanya Plibersek says the Opposition is considering a range of options to help first home buyers.

“We’re looking at a way that people could put in money directly from their pay packet each week, save it over a number of years and finally take out a lump sum, but only for a deposit for a home,” she said.
I don’t think any one measure will work on its own. Changes like this might work if they are part of an integrated package of measures.

This type of proposal would need to be targeted very tightly, or it could just end up as another tax break to add to all the other tax breaks that are already distorting the housing market – potentially costing a lot of money while also possibly contributing further to upward pressures on housing costs.

There is a meeting of the country’s housing Ministers in Darwin this week. This report in The Age says that

the states are set to demand a big overhaul of government housing policies, amid plunging affordability and claims that billions of dollars of Commonwealth rent help has flowed to the wrong people. The states and territories will use a national conference of housing ministers in Darwin on Wednesday to unveil a six-point plan they claim will lift access to government housing, improve home ownership rates and boost affordability for renters.

There’s no shortage of ideas about how to fix the housing affordability crisis, but until we get a consistent and cooperative national approach on it, we won’t get very far. As the report in The Age makes clear once again, whilst ever Peter Costello remains in office, we won’t get further than blaming the states and ignoring the evidence that the Commonwealth’s ‘assistance’ is partly contributing to the problem.

Treasurer Peter Costello says housing affordability is a state issue. He argues that the Commonwealth already provides substantial tax incentives, including capital gains tax discounts for investment properties and negative gearing, allowing investors to write off losses against income.

Labor has released a discussion paper, which you can access here, prior to holding a national housing affordability summit later this month.

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37 Comments

  1. How about those that can’t afford a house in the ‘burbs move to the regions where houses are cheaper. This will benefit both areas. Whilst there is no doubt houses are dear in the burbs, they’re cheap to build compared to their market price – someone is doing something wrong somewhere. Some people suspect it is the gouging of land prices.

    People should make a tree change a little earlier in life and prepare for a little longer commute to work.

  2. Is there a suggestion the $ billions of dollars are being wasted on housing cheats Senator!? Because well, I cannot stand any form of government now,and their morality,so who is cheating here!?

  3. Vee, encouraging people to move to where housing is cheap usually means they have to move to the very outskirts of town and then commute in. Given that public transport in the outer suburbs of most cities is less than stellar (and absent in some cases), you’re just going to see longer commutes to work which leads to more emissions and traffic congestion on freeways and arterial roads.

    High-density, low-cost housing is going to have to be the way we go. Mum, dad and 2.4 kids in the suburbs isn’t going to be possible if our cities continue to grow at the rates they currently are (especially Brisbane). Transit-oriented development coupled with world-class public transport systems and well-maintained public green space will end up being the substitute for the quarter-acre block.

    Making an early tree change will just put extra pressure on our urban, suburban and natural environments.

  4. Apparently, you’re not allowed to scalp footy tickets for more than 10% of thier value. It’s against the ‘law’.

    So, how come we can scalp something as vital to social health as housing?

    If people were only allowed to own only one house per family, surely there’d be enough to go round without swallowing up arable land for yet more sprawling suburban deserts.

    If housing had the same legislation in place as ticket scalping, there’d be a lot more housing out there on the market because it can no longer be traded for ludicrous speculative hyped up prices. However, the building and real estate industries, local council brown-paper-bag development proposal slush funds, land taxes, capital gains tax, superfunds and banking interests would never recover from the slump in revenues. The centre wouldn’t hold! Things would fall apart!

    You’ll forgive me if I don’t think anyone’s heart is really in this. Sounds like electioneering to me.

    But you get that these days, instead of public debate.

  5. Sam Clifford

    What I’d like to add to your post is the inclusion of diverse demographics within the residential planning, so that you don’t end up with mum, dad, and 2.4 kids in a street full of the same.

  6. Sam, I was suggesting further than the outer suburbs, the complaints about commutes in the city is the urban version of “we’ll all be rooned”. If they’re commuting, its less emissions than all those people driving. No making the tree change will help the economic development of the outer areas and being from an urban area they’re more inclined for green support will help keep the environment sustainable.
    High density housing is like arguing for increased stress and more slums.

  7. Public transport in small towns isn’t really all that viable unless you essentially force people to use it. Don’t get me wrong, I’d love places like Rockhampton to have their urban rail rebuilt and places like Maleny to have a comprehensive bus network. Without significant funding and public attitude changes we’re not going to see mass transit commuting in areas where traffic congestion isn’t a motivating factor.

    High density housing is more like arguing for more efficient use of land than urging the creation of slums. Unless we stop urban sprawl, we’re going to start gobbling up satellite towns and other nearby cities and creating huge cities which face problems with air quality, congestion due to cross-commuting, loss of control over local planning etc. London and New York are looking at creating boundaries to the growth of the city in order to encourage more efficient use of existing residential land.

    In Brisbane we’re seeing things like the Albion Master Plan which will take away public green space and give it to developers to build high-rise apartments. This idea that we need to release more land fails to take into account the social and environmental impacts of growth. Housing affordability is but one problem with our model of growth and urban planning. Releasing more land and encouraging rural growth will only destroy the natural environment further and drive communities apart as we all seek to own acreage where we can live our quiet life without having to interact with others.

    It is possible, through Transit-Oriented Development (with government transport spending focusing on public rather than private transport) and the preservation of public green space, to keep further growth confined geographically without having to destroy the local environment.

  8. who owns the houses across oz?
    what are the income and wealth levels of house owners?
    who buys houses based on a ‘family’ partnership?
    what contract exist between family members [both direct & in-direct]?
    what is ownership demo-graphics look like?
    how many south africans own their homes & other property in oz?
    what are the complete demograhics of wealth distribution of wealth & income in oz, classed by religion, ‘race’, country of origin and so on?
    HOW about asio, afp and ‘other’ spook agencies getting off their AAA’s and do some USEfull spook work?
    how about some of these ‘social’ scientists looking at income & wealth distribution with a focus on ‘age’ distribution?
    WHO compiles the data, info & WHO checks the research? WHO decides who gets to DO any research?

    at a general level, what is the FOREIGN ownership of oz houses [direct & in-direct]?

    so far, i note that future geneRATION_sss are getting NAILed on the cross_$$$’s^i=GREED!

    i note that there are serious tax breaks for high income people who split income optimally, share ownership of houses, own many [e.g., 10+] houses, own property in less developed states [e.g., fiji], and so on.

    this lib gov has allowed this to happen and actively encouraged private leverage in the housing market.

    this is not a small issue – in my mind this is the single great failure of jc & cronies over the last 11+ years.

  9. There have been a lot of good ideas re materials to build houses with over the years,and many good ideas about redevelopments.Sadly,when large investment monies get thrown at them,it unlikely the end result will be affordable housing.I still think,government should work harder to allow the population to be like American indian tribes,able to move around ,whilst paying off the mortgage,house swapping etcetera,to insure that skills are spread more evenly across the nation.Like the floods in Newcastle and in Victoria..there is no research undertaken so that people just leave these areas,have others clean the houses up and restart the industries and maximise the skills in other places. I am sure there would be many people willing to move around,providing services if it could be organised. Why it is that people are not living at schools ,because of arson remains a point of enquiry.Schools an all staff including cleaners and repair people,on the lower rungs of income,have to pay rent or buy into expensive land.Those school buildings whereever you find them could house many people,and the schools themselves could undergo re-building and modernisation for new learning endeavours,whilst workers and parents either worked there,or slept there as after work housing.Still the status of that as parents workers and schools,under present governments seem reluctant to even look for ways that build in respect for learning,schools workers and those people who are homeless but not inadequate in themselves. A reluctance by government to admit that it is more than a part reason for housing problems,skill formation and to reduce desperation,the other players in housing require their users a sink or swim approach,but, you cannot win if you dont know what you are swimming in.

  10. there is no housing crisis. there’s an overpopulation crisis. let’s start culling at the worn-out end of the line:

    1st the over 100’s, in public executions, to show we’re serious, then work down through to the 70’s and 60’s.

    at this point, housing will be much more affordable and as a bonus, there will be much more money available for schools and medical care. so we shift to a steady-state situation, i suggest the ‘soylent green’ solution.

    or maybe you know a better way to deal with overpopulation, or any way at all- let’s hear from you, please. there is a serious lack of discussion on what is a very fundamental problem.

  11. Al Loomis,I try very seriously about this subject,half of this old place is actually moving and falling apart..I believe the place is salvageable,I dont own it…money is a problem for me,I feel like moving on,am unsettled I cannot reassure myself about this place.I am very disappointed,about a lot of matters presented here,at the Senators,I dont feel its a waste of effort to humour oneself or be very disappointed.[ how do you spell humor..sounds then like part of the skull!?]And convince me that all the posts are not serious.If you talk economics ,I have seen enough of that.It remains a world problem,and well some of the world statistics arealso pretty draining,if you like practical considerations.And I really dont want to go out of this life I live, backwards,just being crotchetty and making no world of difference. I remain ambitious as much as I can,whilst my own life disappointments, burns me up now and again.And depression remains a close ally and enemy,until I work or walk or think or sing my way to something else.Al Loomis you are amongst adults,sometimes the brain is well and truly brushed with clag with them folks.

  12. Popualist garbage, from a Howard wannabe (Rudd)It’s inflationary like the 1 st homeowners grant do you really believe that it helps the poor “non” the money just ends up in the pocket of rich landlords.

    How to solve the problem?, Public housing!! This would mean less competition in the private sector meaning prices will become more stable If countries like Singapore or Hong Kong (governments are the largest “landlord” in the world! so why can’t we do it here in Aus?

    Ok sky high public housing develepments may not work in Aus though maybe we could find a model to suit Australia?

  13. Vee high density housing creates slums! hardly I no of plenty of “1/4 block” type suburbs in outer Bris that are slums not a high rise to be found in sight!

    Is Switzerland a slum? I belive it is one of the more dense populated countries in Europe 400 people/ km2 the REAL figure is far far higher when you take away all the mountains,lakes rivers etc.

    Even in the deepest rural villages you will find high risers on the borders of the village. I did not see a suburb their as we no it in the anglo world though you may find the odd suburb like street housing tacked onto villages (communes).

    To be honest with you I did not really see any slums in Switzerland!

  14. Al while I agree we do have an over population problem in our state,due to lack of water,electricity,gas and land.Your blaming the elderly for living in their homes,they worked hard in their day & are more than entitled to be there now.When or if they need to go into a home due to health issues,the homes aren’t availiable so many stay in a hospital which is creating problems there. Moving to the outer metro is fine but there is no point in buying land as it will be sometime before builders are availiable to build a house .Next there is the transport problem,the question should be what transport.Not far from here there is a new housing estate going in,what many object to is its being built on a swamp. So the problems go on, there is land around but its entangled in red tape so housing is still over priced.

  15. ghost writer has hit the nail rite on the head
    when the current govt came to power the average house price was somewere between 40 to 60k 11 years later its 300 to 400k and they say there is no inflation.
    the amount of tax on gst alone in regards to development of land and building a house is mind blowing .
    its like fuel the govt is blamming every one it can all the while half the cost is duty and gst they are making money buy the truck load.
    now when you take into account the that the state govts and local councils are dowing it to you can probibly halve the cost of building a house.
    andrew how about finding someway to get out to the ppl the real cost of building and who gets what including development building and the real cost of paying a house off to greedy banks and money lenders.
    i dont think it would be to hard
    but the govt mite not like it .

  16. A quick google search will show that countries such as England, Ireland and Spain are having exactly the same housing “affordability crisis” dialogue as us – the universal feature in all of this is easy credit. Immigration may be playing some small role in fuelling demand but the biggest demand-inducing factor is low interest rates and mortgage lenders falling over themselves to drum up new business. Take all of this dangerously easy credit out of the equation and the housing market will eventually return to some kind of price equilibrium due to the reduction in purchasing power. Yes land supply might still be an issue but only a marginal one. Oh and there’s also the halving of capital gains back in the late nineties – talk about adding fuel to the fire. Now Howard and Labor have got themselves in a bind – the majority of voters are home owners and it wouldn’t go down well to say “Oh we’ve let house prices overshoot the mark and they’ll need to come down so that we can restore some kind of economic justice”. Politicians talk as though housing affordability is somehow removed from house prices because they’ve created a two class society with competing interests – the equity-rich property-owner who has come to expect above-inflation house prices increases, and the propertyless whose purchasing power has been completely devalued.

  17. The world as whole could do with reducing its population growth (which it is, but not as fast as desirable). But to blame the housing affordability crisis on ‘overpopulation’ is just silly.

    One could say it is in part due to a failure to deal with population growth in specific parts of Australia, but that is a different thing – and in any case only one part of the issue.

    It is worth noting these comments from Prof Patrick Troy from the Aust National University:

    Professor Troy from says the Federal Government bears the main responsibility.

    He says it is a policy problem on a national level.

    It’s very largely one of the making of the Commonwealth Government’s inaction and its quite improper policies,” he said.

    “They’ve not only allowed, but encouraged people to go into negative gearing.

    “That’s just made a hoopla arrangement.”

    Professor Troy says, however, land release is only one part of a complex issue.

    “This Government has been uniquely responsible for a rate of inflation in housing policy and housing prices which we’ve just not seen for a generation,” he said.

    “For the Commonwealth to turn around and say, ‘well it’s all the states’ fault, they should just release more land’ is childish.

  18. Ok red crab, here goes…
    Over the last 6 years total government tax take (federal, state and local) on new house and land packages has been an average of $92,755 (per new home)in Melbourne, $102,980 in Brisbane and $115,000 in Sydney. ABS figures. As a % of the total cost of new house and land packages (350-400k) “tax” is currently between 25 and 30% of the total price paid by the public. It’s not half the cost but it sure is a huge whack, and way way more than it used to be in decades past.

  19. Yes Andrew, Prof Troy has hit the nail on the head – the Federal Government has significant blood on its hand over this. But the problem is this – does either side of politics have the courage to abolish (or at least reduce) these disgraceful and distorting tax breaks? This country is now brimming with property moguls and any change to taxation laws would bring a howl of protest (and a loss of electoral support) against the instigating party. It’s so refreshing to see your website and to hear a spade being called spade. I am very worried about the outcome of this housing affordability debate – I share your concern that some of the proposed solutions will simply add to the price pressures and make things even worse.

  20. A move to re-regulate the banks might help also.

    People should also decrease their unrealistic expectations – going on overseas trips, throwing money away, marrying late and then complaining about not being able to afford a house containing everything that opens and shuts, with 2 or more new cars in the driveway.

    With the birth rate at 1.5 children per couple, a lot of people wouldn’t even need a house. Something smaller in the form of a high rise apartment would be easier to look after with both parents working and no one at home most of the time.

  21. Julien:
    Once again I totally agree with you. Two words – public housing.

    Public housing saved my life. I was homeless at 8 months pregnant after my relationship broke down. I put my name down for public housing as soon as I could. In the meanwhile I lived in my car and then managed to get a little flat in a high crime area. The rent was killing me.

    By the time I got called up for a govt house we’d had the phone and power cut off and I was eating next to nothing and quite ill and trying to mother my new baby. That govt house saved us.

    I will never own my own home now. I know that and I’m ok with it although I do worry about my old age and if I’ll ever lose this govt house. But for now I can honestly say – If I was still renting privately I’d be homeless again by now.

    I couldn’t manage without the fact that the rent is adjusted up and down according to my income – especially in this time of casual and short-term contract employment.

    I don’t know how single mums and students and the unemployed not in public housing are coping.

  22. Thanks Lana,sorry for what a happened top you, I’m lucky I own my own home (bought in 96) And I’m not one of those “happy homeowners” that Howard Costello speak of.

    The way I see it is why WAS I (lucky) enough to be able to afford my own home, yet today same job same income it would not be possible I think to myslef “thats just not right”

    I do NOT want to see prices fall though I could like prices to stablise (wages catch up)

    I suppose a publice housing scheme will never happen from the feds…..

    Lana what other things have you agreed with me in the past (I can’t remember!!)

  23. The issues involved in housing affordability seem far more complex than is being assumed as the basis for various ‘solutions’ that are being put forward (see Some Thoughts on Housing Affordability).

    Politicians promises to fix this may turn out a little like Bob Hawke’s infamous claim that ‘no child will live in poverty’.

  24. The argument for state and local government charges for new houses is that it costs money to provide transport, electricity, plumbing services for these areas – along with new hospitals, schools and police stations.

    Of course, the fact that we have less people living in larger houses doesn’t help. When I was growing up, I shared a room with my two brothers. My friend who has three sons has a bedroom for each.

    But I agree with Prof Troy (as quoted by AB), it’s a complex issue.

  25. Sam, I wasn’t really referring about public transport within towns but to other towns.

    I know of people that work in Canberra that live nowhere near Canberra. I am not sure of whether there is daily public transport for them offhand but I do know that they can afford a house, a decent house, not the poor excuse for housing in Canberra (whether public or otherwise), they car pool to work and back, they get good pay and can afford a good house or flat, their rates, etc, etc. They’re financially secure and happy.

    And I’m sure any extra money they have goes into the local communities where they live.

    Now take all that and put them in Canberra, you might get less emissions but that’s about it. They wont be able to afford a good house or flat, their bills, etc and they certainly wont be happy.

  26. Hospitals? Public transport? Schools? What are they?

    I think we all know how accessible public hospitals and dental hospitals are now. You can wait forever, die in the meantime, forget about it, or find the money to pay.

    Public transport in my area is still in the Dark Ages, despite the fact I live only about 8 km from the city.

    A new high school has been needed (at Upper Kedron or Samford) for years. Ferny Grove High School is now run as 5 separate schools with a Deputy Principal in charge of each year level. The Executive Principal gets the Year 12s. The school is in need of extensive repair.

    All of the local primary schools have in excess of 1000 students – full of demountable buildings with low pitched rooves (lovely in the summer!).

    The only school with a low enrolment is at Grovely – where there’s a Special Needs Unit for (sometimes) dangerous students.

    It’s a lower socioeconomic area with a significant Aboriginal & Torres Strait Islander population – but I think it’s the Special Needs students who have caused a mass exodus from there.

    I’ve heard of teachers coming out of there crying – never to return.

    After a very long wait, we finally got a police station at Ferny Grove.

    Housing in Canberra is very expensive, but it does have a lot of high income earning professionals.

    If you go along to a secondhand shop, you can pick up brand new clothes and toys for your children for next to nothing.

    Canberra is like a hick town compared with Brisbane. There’s almost no night life and its communities and shopping centres are far flung.

    It’s cold and dry, with plenty of flies, produced by the surrounding sheep country. It’s a nice place to visit your children and grandchildren, but don’t stay there if you are prone to eczema!

  27. Julien:
    We’ve agreed on quite a few things – it seems every time I read a posting from you I think ‘yes – my sentiments exactly’. Most recently I liked that in ‘Rivers of Beef’ you pointed out that people don’t actually need to eat meat.

    A federal public housing scheme or, at least, more federal funding for the states would be great. Or, hey, even better management of the resources the states do have would be a start. There’s more than one govt house sitting empty in this area alone.

    You’re right about people today in the same level jobs as a few years ago now not being able to afford home ownership. Office workers on $25,000 – $30,000 in the late 1980’s could afford a home here pretty reasonably as they cost around the $70,000 mark. Today, regular office workers are still only on about $35,000 – $40,000 and houses here are $700,000. We have a lot of Asian investors here so maybe that’s a bit overinflated, but still…

  28. pedro
    thanks for your facts but you have forgoten some very important charges how about the gst and local govt charges that are charged on land development that are passed on to the builder .
    i think you will find that will boost the % up quite a bit more.

  29. muzzmonster
    just a small not .
    transport is generaly state govt.
    power, plumbing , roads and usualy 12months mantanance are supplied by the developer .
    the local govt only checkes the development .
    they charge rates to cover mantanence after the 12 month time is up.

  30. Lana, post #30:

    Buying a first home has always been an uphill battle. Most people used to marry quite a lot younger and raise more children, at the same time as paying a mortgage.

    Meat is an important part of the omnivorous diet eaten by humans.

    If the truth be known, it is easier to control a population of non-meat eaters, so they will more readily accept pay cuts and numerous other abuses that are likely to be served up to them within a short space of time.

    I used to think vegetarians (and their derivatives) were behind the move to cut beef production, but now I think they have been the first people to succumb to the indoctrination.

    Feral has told us that one of his reasons for not eating meat is the cost. If beef production is cut, supermarket prices will be much higher, taking most people’s choices away – another assault on both middle Australia and, in particular, the poor.

    I hope everyone will have time to watch “The Great Global Warming Swindle” which will be screened on the ABC tonight at 8.30 p.m.

  31. You are right, red crab in saying that roads, electricity and plumbing are supplied by the developer, but at a certain level of service due to local government regulations.

    A member of the Brisbane City Council gave a lecture at my uni course (Urban Planning) in which he said it was the council policy to increase charges in order to reflect the money that council was putting into building and maintaining infrastructure.

    It seems for many years councils have not been maintaining and upgrading vital pipes etc – which means we are now paying for the greed of the 80s and 90s.

  32. Lana:

    I trust that “Good lord” means you are sitting up and taking notice?

    A lot of birds can be killed with the single stone that constitutes the myth of “man made” global warming.

    Do you want our nation to be brought to its knees when its macro-economy has been destroyed by Green environmental terrorists putting paid to our primary industries?

    Do you want the micro-economy of your household destroyed by another Coalition government?

    Have you started eating Peter Beattie’s new low protein, low calcium peasants’ diet?

    A person could raise neither a pimple nor a protest eating that – let alone anything as confronting as a breast cancer.

    Do you

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