When we cast our vote at the ballot box and elect Governments to represent our best interests and help our economy thrive, quite rightly we think they’ll put a lot of thought into the decisions they make.
We’re entitled to believe that any changes in will be well-thought-out and all consequences considered in the best interests of most citizens.
Well, that might be what we all expect but I’m sorry to say it’s often not the reality when it comes to regulations around the housing industry.
In most instances, our political leaders don’t think much beyond the press conference.
Take a recent example of well-meaning do-gooding – the HomeBuilder scheme, which provided a government grant to encourage people to build new homes.
This was devised to keep the construction industry ticking over and workers in jobs throughout Covid. Unfortunately in some circumstances it’s had the opposite effect, driving some building companies to the wall and leaving home-owners out of pocket.
HomeBuilder was extremely successful in terms of generating demand from people wanting to build homes, but unfortunately it appears no one bothered to think through the consequences of what could go wrong.
The questions they should have been asking before they lined up for the smiling media opportunity to announce the scheme was how would the industry cope?
They should have considered simple things like: will we have enough bricks and enough bricklayers? do we have sufficient supplies of timber? Are there enough plumbers to do the work? what about carpenters and all materials they need?
Are there sufficient supplies of market-ready land to meet the demand from people wanting to build new homes
As we all know now, the answers to all those questions were: no, we don’t.
At a time when housing construction is booming, builders are going broke. This is happening, in many cases, because builders are locked into fixed price contracts at a time when the costs of materials and labour is skyrocketing before they can even turn the first sod.
Many have been put in the position of building houses at a loss – and when that happens, everyone loses. The builder goes broke, the workers lose their jobs and the prospective home-owners are often left with an unfinished, half-built house.
Then of course we have the Queensland Government trying to change their land tax rules and force interstate investors who dare to buy in Queensland to pay a tax on their interstate properties.
This is the latest in a series of imposts from government which have created a worst rental shortage crisis in the nation’s history.
The situation where rental vacancies are below 1% almost everywhere across Australia has come about because of a series of policy announcements by State and Federal governments and regulatory authorities who haven’t property considered the consequences of their actions.
It’s been going on for years. Back in early 2014 APRA decided to impose a cap on banks to limit lending to investors to 10% of their book.
It wasn’t lifted until 2018 and what flowed from that was a shortage of rental properties which spanned five years.
The recent history of property investment in Australia is full of examples of changes to rules and regulations which have not been thought out properly and have actually deterred investment.
The Federal Government in 2017 decided property investors were getting it too good and changed the rules around what they could claim in depreciation if they bought existing properties instead of new.
The result – fewer investors wanting to buy existing properties driving up demand for new house and land packages, resulting in investors competing toe to toe with first home buyers.
Over the past five years there has also been a raft of measures by various state governments which have imposed higher taxes or new taxes on the housing industry.
Federal Labor has made the problem worse with its rhetoric at the last two federal elections, threatening to abolish negative gearing and make onerous changes to capital gains tax.
The combined impact of all those events – APRA measures, Federal Government decisions, State Government imposts and Opposition policies – is a massive discouragement to property investors.
For the past five years, investors increasingly have been sitting on the sidelines and steadily the pool of properties available for rental has diminished – and now we have a rental shortage crisis.
Historically, investors have comprised about a third of the market. But currently their market share is well below those benchmark levels.
In many parts of Australia, hopeful tenants can’t find a rental property at any price.
Politicians, it seems, have short-term horizons and never think through the consequences of their actions.
In 2021 the Federal Treasurer asked the Standing Committee on Tax and Revenue to hold an inquiry into the contribution of tax and regulation on housing affordability and supply in Australia.
But they didn’t need yet another inquiry. Anyone who operates in the property industry can tell you what the problem is with affordability – and that’s government imposts.
Taxes, fees and charges at all levels of government mean that about half the cost of new home and land package in Australia is local, state or federal government fees, taxes and levies.
They all use the housing industry as a cash cow – and the people who pay, ultimately, are the first-home buyers.
In isolation none of these issues seems too big a deal. But when you bundle together all the changes introduced by various levels of governments and factor in the actual long-term consequences, it becomes apparent that the ultimate impacts are unaffordable new homes and a chronic rental shortage, leading to sharply rising rents.
Property investors aren’t the ones who will lose out, they’ll just put their money elsewhere.
It’s the people who want to rent a home at a reasonable price or people who want to be able to buy a home close to where they work who will struggle due to a lack of stock.
Politicians pay lip service to the housing affordability issue, but it’s their ill-considered policies which are making it worse, not better.
I really don’t think politicians are even aware that we are living through a rental crisis.
They rarely think beyond the press conference and the opportunity to score publicity points.
Australians deserve better.
