A federal parliamentary inquiry has been set up to investigate the challenge of housing affordability in Australia.
Chaired by government MP Jason Falinski, the House of Representatives Standing Committee on Tax and Revenue will investigate the impact of tax and regulatory regimes on price, affordability, and supply of housing in Australia.
In early comments, Falinski pointed to supply as the key concern, arguing that restrictive planning laws and regulatory settings were to blame for ongoing unaffordability, rather than tax settings.
“Arguments about the impact of increased subsidies and tax concessions on housing have continued for some time,” said Falinski. “There is ample evidence that points to the small effect such measures have on supply, indeed the research points to limitations on land and restrictive planning laws as the major causes of shortages in supply. As consistently noted by the RBA and others, regulatory settings are directly responsible for the unresponsive nature of housing supply in Australia.”
“As data provided by the Reserve Bank of Australia (RBA), the Treasury and the Australian Bureau of Statistics (ABS) shows, home ownership, one of the building blocks of Australian society, has been falling for the last 30 years. In my view, this represents an urgent moral call for action by governments of all levels to restore the Australian dream for this generation and the ones that follow.”
“The Organization for Economic Co-operation and Development (OECD) conducted an analysis of Australia’s housing market, particular its very high ratio of housing prices to household incomes. The OECD concluded that Australia’s unusually high level of inelasticity in housing is the major driver of this ratio. This has resulted in our country having the fourth-fastest house price growth out of the world’s advanced economies over the past 20 years.”
However, researchers who conducted a 20-year review of planning regulations and house prices across 19 centres in Brisbane found no link between the two. “Locations with increased zoned capacity for housing saw increased (not reduced) property prices. Across the selected sites, houses increased in value by a factor of three and apartments by 2.3 over the two decades studied, as they did elsewhere in Australia,” researchers found.
“What is driving up house prices now has little to do with zoning, and it is happening worldwide.
“It is the liberalization of finance and the treatment of housing as an investment product that got us into this mess. Further liberalization of planning regulations is unlikely to get us out.”
The parliamentary committee is inviting submissions from individuals and organizations, which can be made until 13 September.
The parliament last investigated the housing affordability challenge in 2015 through the Senate Standing Committee on Economics. The committee made 40 recommendations, including the appointment of a minster for housing, a national affordable housing plan, and a seperate inquiry into prefabricated housing. The government rejected all but nine of the recommendations including a recommendation to study the effects of negative gearing and capital gains tax discounts on affordability.
