Media releases are not solutions

The National Cabinet’s housing affordability solution is just another media release on the way to no place, according to the Australian Institute for Progress’s Executive Director, Graham Young.

“The government is promising to build 1.2 million homes, 20% more than we would normally expect, and it is directing $3 billion to the states to make this happen – that is a subsidy of $15,000 per dwelling at a time when the new national building code will add more than that to the cost of building.

“It also assumes that the workforce and resources are available to build 20% more houses than business as usual.”

Mr Young said the solution to housing doesn’t require the federal government to spend any money at all.

“The one encouraging thing from the meeting is that the states and Commonwealth agree that the solution is more housing supply, however it ignores demand factors like record immigration, and it envisages meddling in the market to produce more ‘affordable’ housing in locations where housing can’t be built affordably.

“Medium and high-density dwellings cannot be produced for an ‘affordable’ price for a number of reasons. Multi-story costs are higher than single story, and they are generally built in areas where land is in short supply and therefore costly.

“In addition, because medium and high density tend to be built in already developed areas, they rely on residents in detached dwellings deciding to sell, which in turn often depends on their desire to move, or a change in family circumstances like children leaving home, or death.

“This is a slow process.”

Mr Young said another issue was that private capital that was the traditional mainstay of rental accommodation was leaving the market because of onerous “tenant’s rights” legislation.

“Private landlords are much more efficient at managing rental properties than governments or large businesses because they invest considerable time into maintaining and managing their investments.”

Mr Young said that if the national cabinet was serious about housing affordability it would:

  • Curb immigration
  • Shelve the new building code
  • Shelve proposed “tenant’s rights” legislation (as thought tenants don’t have plenty of rights at the moment)
  • Guarantee no changes to capital gains tax and negative gearing and lower land tax
  • Redirect capital spending into residential infrastructure to facilitate suburban development
  • Review whole of government spending and borrowing which is causing tradie shortages and putting up the price of housing.

There is a genuine housing crisis, but there doesn’t seem to be a genuine attempt to tackle it.