Housing Affordability: Time For Some 'Out Of The Box' Thinking
From the Desk of the PRD Chairman
It’s time for some ‘out of the box’ thinking when it comes to solving housing affordability, particularly for first home buyers. Governments around the country love talking about it, but very little ever gets achieved following many discussions on the subject.
“Build more housing”, “change local council’s development requirements”, “eliminate negative gearing” and “increase capital gains tax” are all suggestions we constantly hear being bandied about. Some are simply not achievable and others are classified as political suicide – hence nothing ever gets implemented.
With the Federal Government’s current inquiry into Housing Affordability, here are 3 ideas for improving affordability and enabling first home buyers to enter the property market;
- Eliminate stamp duty completely and make mortgage payments for first home buyers pre-tax for 3-5 years to assist them to enter the market. This will have a significantly positive impact on affordability, with mortgage payments 25-30% cheaper than they would be now.
- Allow first home buyers to be exempt from capital gains tax if their first purchase is an investment property. This means it will be easier for them to purchase an investment property as a first step into the market, build up equity and then purchase a home to live in without having to pay capital gains tax on their purchase. Stamp Duty should also be eliminated in this instance.
- A longer-term solution within NSW is to add a VERY fast train between Newcastle, Sydney and Canberra. This would open up numerous markets that are much more affordable than the Sydney metropolitan market, but with a much easier commute to work. Locations as far as Goulburn would be only 50 minutes from a Sydney metro work location.
The first two initiatives could be achieved very quickly and have a positive impact. Although the third idea is one for the longer term, it is something that has been discussed for over 15 years and would be a key piece of infrastructure that would produce many other economic benefits.
It’s time for some positive outcomes that will impact long term affordability and ensure we are not having the same conversations in 10 years’ time as we are having now and we had 10 years ago.