Next month’s state and federal budgets offer governments the chance to do something for those being priced out of the housing market by booming house prices. With the great Australian dream of home ownership in decline and first home buyers’ share of the owner-occupier market falling, the time has come for governments to reach out a helping hand.
It Is a National Problem
Nationally, buyers faced several issues. Home ownership – the great Australian dream – is in decline after four decades of stable levels. The most recent Adelaide Bank/Real Estate Institute of Australia Affordability Report showed first home buyers made up only 12.5 per cent of the owner-occupier market in the final quarter of last year, compared to 13.6 per cent in the previous quarter.
The REIA is so concerned about affordability. It recently hosted a roundtable discussion on the issue with real estate, construction, finance and communities sector leaders. It was attended by Minister for Social Services Kevin Andrews.
The roundtable identified an undersupply of housing as a key driver of declining affordability. It also said state-based stamp duties discouraged housing turnover, were a disincentive for the ageing population to downsize and reduced property market investment.
The communiqué from the roundtable noted that: “Access to affordable housing is a goal that is shared by the Government and all sectors of the community. A lack of affordable housing impacts on the functioning of the economy as well as the wellbeing of individuals and the cohesiveness of communities and society.”
Real Estate’s National Body Challenges the Federal Government to Help
We are hearing a great deal about how tough the May 13 Federal budget will be. But it is also an opportunity for some good news: a chance for the Federal Government to help those struggling for a foothold on the property ladder.
The REIA has sought uniform assistance to first home buyers across all states and territories and urged an annual review of the First Home Owner Grant to maintain relativity with house price movements.
REIA also wants action on housing affordability and presented 10 pre-budget proposals. These included allowing the first home buyers to access their superannuation to buy their home, retaining current negative gearing arrangements for property investments and no increase in capital gains tax for those investments. It advocated abolishing stamp duty on property transactions in favour of a more efficient source of state and territory revenue
Population Pressures on Housing
New Australian Bureau of Statistics data shows that the nation’s population topped 23.2 million at the end of September last year. Victoria’s population grew 2 per cent, faster than State Government predictions, while Western Australia grew by 3.1 per cent – the nation’s largest percentage growth – and New South Wales by 1.5 per cent.
Australia’s population growth for both natural increase and from new arrivals from overseas was larger in the year to September 30, 2013, than in the previous year. Net overseas migration was responsible for 59 per cent of total population growth.
It goes without saying that all these new Australian residents have to live somewhere. Many of them will buy their own properties, some will be interested in developing investment portfolios. Population growth means more houses are needed and more competition for existing homes, placing further pressure on prices. Unless governments act to help, more people will be priced out of the market by rising prices, particularly if interest rates go up later this year.