Most Australians won\u2019t be concerned that the federal government has fallen woefully behind its National Housing Accord target.<\/p>\n
OurTop10.com.au modelling by Primara Research shows if the government were to hit its ambitious housing target, house prices could slump by $270,000 or 22 per cent.<\/p>\n
Primara said if unemployment and interest rates remained at current levels, building the required number of houses would smash property values. <\/p>\n
According to national figures, Australia started building 6000 less homes in the March quarter compared with the previous three months, while completions and housing construction also stalled throughout the quarter. <\/p>\n
Total new home starts fell 11.2 per cent over the quarter to 48,012 dwellings.<\/p>\n
The biggest drop was in high density housing, which slumped 19.8 per cent in the first quarter of the year to just 19,116.<\/p>\n
Detached house starts dropped 3.5 per cent to 27,658 homes.<\/p>\n
Following March\u2019s data, Australia is now 125,000 homes behind its ambitious housing target of 1.2 million new properties in the five years until 2029. <\/p>\n
To meet this target, Australia needs to build about 60,000 new homes every quarter.<\/p>\n
Falling house prices<\/p>\n
After failing to hit its target for the first year of the accord, Australia will now need to build 260,000 new homes to reach its target by 2029. <\/p>\n
Independent economist Saul Eslake told NewsWire that governments ran into a basic issue when it came to building more houses, as increasing supply led to lower property values. <\/p>\n
\u201cThe government cannot bring themselves to say we want cheaper housing,\u201d he said.<\/p>\n
\u201cWhy? Because for all the megalitres of crocodile tears that politicians of all stripes routinely shed for the difficulty facing first-home buyers, they know for any given year there\u2019s only between 100,000 to 150,000 of them. <\/p>\n
\u201cSo even if you assume for every one that succeeds in buying a home, there\u2019s five or six that don\u2019t. At most, you have one million votes for cheaper housing.<\/p>\n
\u201cWhereas there are 11 million people who own their own dwelling, at least two million people that own an investment property \u2013 although they overlap.<\/p>\n
\u201cThat leaves you with at most one million votes for cheaper housing and 11-12 million votes for more expensive housing, so even our dumbest of politicians can do this maths and they do.\u201d<\/p>\n
Mr Eslake said housing was the biggest contributor to inflation and neither Prime Minister Anthony Albanese and then opposition leader Peter Dutton campaigned on lowering house prices in the lead-up to the last federal election, even as both ran a cost-of-living campaign. <\/p>\n
\u201cThey both offered policies that would lead to house prices going up,\u201d said.<\/p>\n
He Mr Eslake said the government\u2019s changes to negative gearing and capital gains tax were a step in the right direction for first-home buyers.<\/p>\n
He noted about 80 per cent of money investors borrowed was for established houses, and investors accounted for about 40 per cent of total lending.<\/p>\n
Mr Eslake said the changes to tax incentives would lower the demand for about 32 per cent of lending towards established houses. <\/p>\n
Critics disagree, saying the tax changes will decrease investment in the sector and drive up prices. <\/p>\n
\u201cThat demand, I think, will be substantially reduced because they are not going to get a tax break for it,\u201d Mr Eslake said.<\/p>\n
\u201cThe government says 75,000 more people will be able to buy their own home because they face less competition from investors for established dwellings.\u201d<\/p>\n
He said this would lead to falling rental prices over the medium to longer term.<\/p>\n
\u201cIt is complete bullsh*t that rents should go up,\u201d he said.<\/p>\n
\u201cIf you get fewer investors buying houses that already exist, by definition that must mean there is more opportunity for people wanting to buy to live in them,\u201d Mr Eslake said. <\/p>\n
Buying opportunity<\/p>\n
Primara head of research and data Peter Drennan told NewsWire if the government delivered on its housing objectives, it would create a buying opportunity for a generation of Australians.<\/p>\n
\u201cIf their mandate is to make housing more accessible and affordable, then increasing the supply will allow more people to buy a home,\u201d he said.<\/p>\n
\u201cThis is looking effectively seven years down the line, so if (the government delivers on its mandate) they are in a position to buy a house at a price they\u2019ve never seen before.\u201d<\/p>\n
Mr Drennan said average September 2023 house prices were about $925,000, and projected to peak at $1.15m in September 2027 before falling to $927,000 by the end of 2031 under the scenario of the government meeting its accord target. <\/p>\n
\u201cFor buyers who\u2019ve priced themselves out of the market, this is what closing the supply gap is actually worth, a genuine shot at getting in at a price last seen 2\u00bd years ago,\u201d he said.
Mr Eslake said falling house prices did not hurt existing owners because they bought and sold in the same market. <\/p>\n
\u201cThe only losers when house prices fall are investors, but does anyone think if investors have bought shares and they\u2019ve gone down that the government is somehow responsible from preventing them from experiencing a loss,\u201d he said.<\/p>\n
Steps to building more homes<\/p>\n
Master Builders Australia director of policy Melissa Byrnes said the tax changes were stopping the country from hitting its targets.<\/p>\n
\u201cChanges to negative gearing and capital gains taxes are slowing activity and investment decisions at the moment,\u201d she said.<\/p>\n
\u201cMore long term we have some workforce challenges. We need about 115,000 workers in the housing sector and about 300,000 to deliver on the infrastructure pipeline that is in place, so there\u2019s some issues with the skills shortages.\u201d<\/p>\n
Ms Byrnes also said Australia had a red tape problem that was significantly adding to the cost of housing.<\/p>\n
\u201cWe do acknowledge the government\u2019s work in reviewing and modernising the national construction code, but that is just the beginning,\u201d she said.<\/p>\n
\u201cThe industry is one of the most heavily regulated in the economy. The productivity commission reported that there is around $320,000 of red tape on every house.<\/p>\n
\u201cFinally, we just need more support for enabling infrastructure. <\/p>\n
Mr Eslake said an easier solution was to \u201cbribe\u201d the states through incentives to help them build more houses. <\/p>\n
\u201cOne of the things to do would be to give the states bigger bribes or grants to loosen zoning and planning controls,\u201d he said.<\/p>\n
\u201cWhy not, for example, make the payments of revenue from the GST conditional on hitting their housing targets?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Most Australians won\u2019t be concerned that the federal government has fallen woefully behind its National Housing Accord target.…\n","protected":false},"author":2,"featured_media":794429,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99,115817],"class_list":["post-794428","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business","tag-newswire-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/794428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=794428"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/794428\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/794429"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=794428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=794428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=794428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}