The ABC’s finance expert Alan Kohler has blamed politicians fearful of offending NIMBY home owners for Australia’s housing affordability crisis.
‘Australia’s housing crisis is the result of decades of failure by the nation’s political classes,’ he said.
He told a 7.30 feature on housing that homes would only become affordable again if there was an oversupply of houses with a backyard.
‘To solve housing affordability, we need to not just meet demand but surpass it,’ he said.
‘In my view, there has to be an oversupply of houses in the inner suburbs, the outer suburbs and the middle.
‘That oversupply should ease rental pressures, and maybe even stop house prices rising.’
But Kohler said politicians were reluctant to upset NIMBY house owners, who wanted to continually get strong capital growth and were opposed to the development of new apartments in their neighbourhoods.
‘The question is, are those with a mortgage or owners like me prepared to see the value of their biggest asset flatline or even fall?,’ he asked.
The ABC’s finance expert Alan Kohler has blamed politicians fearful of offending home owners for Australia’s housing affordability crisis
‘Making housing more affordable won’t be easy – our suburbs will be more crowded, and your house and my house won’t be worth as much, so I’ll leave that to our political leaders to tackle.’
Jacinta Allan and Chris Minns, the Labor premiers of Victoria and New South Wales, are facing political pressure over their plans to override local councils and increase apartment height limits around train stations.
High-rise apartments in places like Sydney’s lower north shore and Melbourne’s bayside would destroy the garden suburb character of leafy postcodes.
But they would also increase the supply of new homes, giving more choice to prospective buyers wanting to live near the city.
When it came to the surge in house prices, Kohler blamed former Liberal prime minister John Howard’s government for introducing a 50 per cent capital gains tax discount in 1999.
‘It’s my view John Howard did more than anyone to make housing unaffordable,’ Kohler said.
Under Howard’s policy, if an investment property increased in value by $100,000, only $50,000 of that gain needed to be reported as taxable income for that financial year.
Kohler said those capital gains tax changes meant house prices had been increasing, on average, at double the pace of incomes for the past 25 years.
He told a 7.30 feature on housing that homes would only become affordable again if there was an oversupply of houses with a backyard (pictured are new houses at San Remo in Victoria)
Sydney’s median house prices was less than six times an average salary in 1994 but by 2004, it jumped to 10 times.
Houses in Australia’s most populated city now cost more than 14 times an average, full-time salary.
‘After rising at double the rate of incomes for 25 years, houses have become unaffordable for nearly all but the well-off,’ Kohler said.
Mr Howard in 2003 defended has capital gains tax changes.
‘I haven’t found anybody in seven-and-a-half years shake their fists at me and say, “Howard, I’m angry with you for letting the value of my house increase”,’ he told ABC Radio at the time.
Houses became more unaffordable during the 2000s as net overseas migration levels tripled from little more than 100,000 to more than 300,000 by 2008.
Brendan Coates, the Grattan Institute’s housing economist, said reducing immigration would make houses cheaper but also see Australians pay higher taxes.
‘Reducing immigration would make housing cheaper – we estimate that every 100,000 additional migrants to Australia probably adds to rents and prices by about one per cent,’ he said.
Jacinta Allan and Chris Minns, the Labor premiers of Victoria and New South Wales, are facing political pressure over their plans to override local councils and increase apartment height limits around train stations (pictured are apartments at Epping in Sydney’s north)
‘The challenge is that reducing migration probably also makes us poorer – most migrants in Australia are skilled so if we reduce migration, housing would be somewhat cheaper but we would all be having to pay higher taxes or enjoying worse services.’
Sydney’s median house of $1.474million now costs more than 14 times the average, full-time salary of $102,742, before a 20 per cent mortgage deposit is factored in.
Someone would need to earn $227,000 to even get a loan – and still be in mortgage stress despite being among the top 2.3 per cent of income earners.
Peter Tulip, the chief economist at the conservative Centre for Independent Studies think tank who was previously a Reserve Bank of Australia researcher, said house prices couldn’t keep increasing at exponential levels.
‘Our national leaders need to tell all of these reluctant voters that they can’t keep expecting house prices to keep going up – we have an affordability problem and that means no more price increases in housing,’ he said.
