Yes we have a housing shortage. And no, there is no easy answer in sight.
But increasing taxes will only hurt housing supply.
The point was made well by Mike Zorbas, chief executive of Property Australia.
In a recent article Mr Zorbas said...
The CFMMEU and the Greens are right about one thing.
More housing is desperately needed now.
Where they are profoundly wrong is that negatively targeting investment in, or delivery of, new housing will help (including Greens’ policy to cap rents, and Australia-wide Olympic level NIMBYism).
Or that bunging another tax on companies that provide housing (recent CFMMEU policy on companies with a turnover above $100 million) will work to help provide the new housing supply we need across the whole housing market, including social affordable or at-market, now or over time.
This after years of an explosion in the rate and variety of new state taxes, from governments of all colours, on housing investment from “windfall gains” to “foreign investor” surcharges.
With all the “Robin Hood” performative dancing and low-level xenophobia that attends these various announcements you would think we didn’t already tax new dwellings and that overseas investment hadn’t helped build the majority of Australian cities through the decades.
Taxes on property already prop up almost fifty per cent of some state budgets.
Government taxes and charges already account for a shocking 2, 3 or 4 dollars in every 10 you spend on a new home.
There should be no possibility of new property taxes at any level of government during historic undersupply of both apartments (the greatest source of rental stock) and detached housing.
That deficit amounts to 1.3 million homes over the past two decades (hat tip former Reserve Bank economist Dr Tony Richards).
This rationale applies to all property asset classes that underpin the viability of our cities while labour availability and cost of capital remain prohibitive.
Governments can start by reducing these taxes to accelerate supply, remembering that any serious national tax reform should start with a safety-netted higher rate of GST that replaces inefficient state taxes.
The fastest paths to new housing remain setting housing targets, creating incentives for more supply and fixing broken planning systems.
We also need governments to boost helpful asset classes like purpose-built student accommodation, retirement living communities and build-to-rent housing.
Higher taxes simply don’t answer the housing supply question.
Source: Property Council Australia
