On Sunday morning most Australians will be picking over the ramifications of the election results and no matter if the outcome was a quick win for one party, or a drawn-out excruciating count, housing has been a central debate and policy area during the election campaign.
The final count will, as a result, help highlight what shape the housing market we will have for the next decade. Campaigning for this election has featured many direct and related aspects of the housing market to a far greater extent than other recent Federal elections.
Various housing related topics including negative gearing, capital gains tax, infrastructure, affordability, immigration, wages and supply have all attracted both new and revised policy settings and agendas. However, many of these topics have been endlessly going around and around for decades and partly as result different areas of the housing market have become fractured.
This election however, we may finally see housing and all of it’s associated policy areas come into much sharper focus. The trick this time is I suggest the need to tackle all of the policy areas together and not just hit upon isolated areas, like supply.
Because here we have seen decades with the clear need to improve both the quality and variety of supply, and more often than not, this has only produced patch results. The industry and others have all suggested that we need a total, all-encompassing policy and the current election campaign may have finally indicated this reality may be on its way.
One problem with only cherry-picking individual policy changes, and not taking a ‘whole of market’ approach, is that solutions can sound simple, but they are not. There’s also the stark reality that events like the GFC can come along and derail individual policy setting, almost overnight.
Federal government intervention and investment is needed across all housing related areas, and this in-turn requires the commitment of state and local governments to ensure that new initiatives are successful and effective.
Infrastructure and housing supply are two good examples. Supply tends to see-saw and that’s heavily impacted by the delivery of infrastructure which until recently has suffered from massive under investment. Let alone new investment like Sydney’s second international airport.
The election campaign has signaled billions in funding for infrastructure and that’s a positive. However, where funds are intended to boost urban and rural projects towards helping to lift housing supply, the investment needs to enhance access to new housing development in line with demand, rather than lagging.
Affordable housing, and long-term security for those who stay in the rental market are also topics that have been debated for many years. Affordable housing is also linked to social housing and partly because of a lack of solid policy support the build-to-rent sector has been very slow to enable enough supply to make a real difference.
The BTR sector is often described as ‘fit for purpose’ and not just adding supply in isolated pockets however, to do this there needs to be committed political will and that might very well include re-shaping tax policies.
Tax policies are a major area and negative gearing has received lots of attention however, that’s a debate that should also not take place in isolation as there will be both expected and unexpected knock-on impacts across the entire housing market.
The taxation gearing of BTR housing investments could help with affordable and secure rental accommodation. Given the total tax take from the housing market the tax re-forms need to extend well beyond negative gearing.
Outside of direct taxation policy, this election campaign has also started to address the declining level of real incomes for many Australians, and low-income growth is a key area of consideration when looking at the housing market and affordability. There has however been little in the way of direct incentives to boost housing affordability.
Ideas such as capping mortgages, or federal buyer grants or extra tax concessions have not been voiced in current campaign. Perhaps this may be as a result of the belief that similar policies are sometimes blamed for increasing house prices, and not helping affordability.
Current policies are instead aimed at increasing real take-home incomes through reduced tax and higher wages. However, the flow-on to better housing affordability looks shaky. The fact that federal policies acknowledge wage growth has fallen behind the cost of living is however, an important link to general housing policy.
Another area of policy tied into the housing market is immigration policy and the impact that could have across demographic changes and the growth of urban areas. Immigration policy then, I again suggest needs to be linked to other policy areas, like planning and infrastructure and not treated in isolation as a popular way of arguably reducing urban stress which, it may not, but reduced immigration runs the risk of limiting economic growth.
More coordinated planning will help reduce the risk developers face in delivery new supply, and currently the gauntlet of planning does impact all areas of the housing market and that brings us part way back to the topic of infrastructure delivery.
Better planning and wider community support for new developments (with better infrastructure) might be an option rather than simply cutting immigration which, has for many decades helped to fuel our economic growth.
I suggest that the election campaign has helped to highlight the many key policy areas that need to be addressed in order to help create a more robust and stable housing market. One that delivers for homeowners, the community and the development and construction industries which are key economic drivers and employers.
There’s no single solution, no silver-bullet however, and changes that are only motivated by the narrow aim of being re-elected will not help. It has been reassuring to see so many aspects of the market highlighted during the past 5-weeks and now we keenly await the results on Saturday evening.