Courier Mail – You can fix housing crisis without wrecking market

Australia once rode on the sheep’s back to generate our high living standards. Those days are gone, but we now march to the beat of the auctioneer’s gavel. Over half of household wealth in Australia is held in residential property, much higher than in many other countries. In the UK, households hold 42 per cent of their wealth in real estate, and in the US it is just 30 per cent. So when auction clearance rates fall to record lows, and there are widespread predictions of property price falls, it is a serious issue for our economy. These trends have exposed the Labor government’s complete lack of an economic plan. The Labor Party cannot seem to explain whether this crash in confidence in property is a desirable outcome of their broken promises on tax, or whether they want house prices to keep rising, “just more slowly”. To the extent that Labor has an economic plan, it is the triumph of spin over substance. There is an issue with the lack of affordable housing in Australia. This is principally because we are bringing in over 300,000 people each year while building fewer than 200,000 homes. High house prices, and in some areas, a lack of housing at all, are because of a shortage in the supply of housing. Dealing with supply issues is tough, especially for this Labor government. Dealing with the inadequate supply of h ld l h d housing would require slashing red tape. Instead, this government has overseen the ballooning of our National Construction Code, the regulations that home builders must conform to, from hundreds of pages to over 2000. Dealing with our house-building shortfall would require the Labor government to end mass migration, but they are addicted to using high levels of migration to artificially pump up our economic statistics, even as perperson real income levels fall. So instead, the government seems to have taken a different path to help increase the affordability of housing. They decided to massively increase taxes on property, despite promising not to do this at the last election. Many people have worked hard to build up equity in their own home or an investment property to help save for their retirement. Now Labor’s policies are destroying the hard work of Australians without even asking them whether they supported such large tax increases to begin with. The destruction of this wealth risks a broader economic downturn too, given how important property is to the overall Australian economy. When the property market declines, real estate agents, lawyers and financial advisers all get less work, and that will ripple through the economy. Many state governments rely on stamp duty when a house is sold to fund our hospitals and schools, so that is hit too. We won’t even restore housing aff d bl h h l h fordability with a housing policy that crashes the market. While house prices might fall, that does not mean affordability rises. If our economy is hurt by a panicked reduction in house values, then ultimately jobs will be lost and banks will stop lending. Even if house prices fall, if someone does not have a job or cannot get finance, they won’t be able to afford a house. Yesterday, a National Australia Bank survey showed that business confidence fell again, and confidence is now 22 points below its long-term average. If the economy tanks later this year, it will be on the government’s head for handing down a Budget that has shattered confidence and trust in government and our economy. The true way to increase the affordability of housing for young people is to maintain a strong economy. Without a good-paying job, no one has the potential to own a home, whatever the price of housing is. The next step is to expand the amount of affordable housing in the market. This need not come at the expense of lower prices for existing dwellings if there is otherwise a strong economy. But we can release more housing in areas further from the major cities with more affordable land. That is why the Liberals and Nationals have proposed establishing a $5 billion fund to help open up new property developments by building the local roads, power lines and telecommunications networks necessary. Over the longer term, we need to build new cities. If we keep trying to cram people into Sydney, Melbourne and Brisbane, land will become more and more expensive, and our capitals will begin to resemble Singapore, not Australia. But we have almost limitless amounts of land available. We just need to create jobs and opportunity around that land. This does not necessarily mean going back to the sheep’s back, but it does mean using all our resources again to develop our nation and give more young people the chance to share in the common wealth of it.