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It’s Not All About FHBs

It’s Not All About FHBs

The unfortunate reality is that the core problems afflicting housing markets don’t get fixed because politicians don’t understand the problems AND they’re unwilling to consult with the people who do.

If a state government gets the message that’s there’s a serious rental shortage, the only response will be to announce they’re going to build a million new dwellings over the next 10 or 20 years – which doesn’t address the core issue at all and is unlikely to ever be delivered anyway.

Politicians are incapable of coming up with anything else as a response to an immediate and pressing issue.

If a state government gets the message that housing affordability is a big issue, the only response will be to announce grants or stamp duty concessions for first-home buyers.

This, too, does not address the core issue – the high cost of housing in Australia and in particular the ridiculously high cost of building new dwellings – but it’s all they have in their kit bag of ideas.

And this speaks to one of the core issues for the dwelling industry – politicians appear to believe that the only people in society who deserve any consideration or assistance are first-home buyers.

And that’s reflected in the state and territory budgets delivered recently: a number of governments have announced measures to assist first-home buyers.

Tasmania has decided that first-home buyers will pay no stamp duty on a home costing less than $750,000.

South Australia has announced a similar measure, while Queensland says it will provide stamp duty discounts for first-home buyers paying less than $700,000 for a home.

From the viewpoint of first-home buyers, that’s better than nothing but it doesn’t address the very high cost of dwellings or the shortages that are causing prices and rents to rise.

And it doesn’t help anyone other than first-timers.

What about other real estate consumers?

What about second-time buyers? What about downsizers? What about investors who supply 90% of the homes that people rent, where there’s a chronic ongoing shortage.

Consider second-time buyers. They might be a young couple who bought a small apartment as an affordable first dwelling. But now they’re starting a family and need to upgrade to a larger home. There is no assistance and no concessions for them. The costs of selling and buying elsewhere are huge, with stamp duty a massive impost.

Politicians have often made statements urging older Australians to downsize – to sell the family home now that the kids are adults and have moved on, and make those family homes available to young buyers.

Apart from the daunting prospect of moving house, the big issue that stops many people from downsizing is the hideous cost of selling their home and buying elsewhere.

Based on the national median price for a house, the total costs of relocation can be around $100,000 – with a huge chunk of that being stamp duty on the purchase of the next home.

But most state and territories don’t recognise this reality.

Tasmania is an exception. It has a 50% stamp duty concession for pensioners downsizing.

If politicians were genuine and fully understood the issue, stamp duty would be abolished for downsizers.

And then we have investors, that cohort that politicians and journalists like to vilify and demonise – and misrepresent as greedy rich bastards ripping off the system.

The reality is that the typical investor buyer is young, earning less than $100,000 and is buying for the first time or owns one other property.

Landlords are in short supply and people need to be encouraged and incentivised to buy properties and make them available for long-term rental.

Right now, there are no incentives to take on that very big risk and burden in the hope of making gains in the future.

There are many, many disincentives, including land tax, capital gains tax, onerous state laws favouring tenants – and escalating costs, including interest rates, insurance premiums, council rates and maintenance costs.

These people need and deserve financial incentives – and, given that investors usually pay more in stamp duty than home buyers, it would be both wise and fair to provide stamp duty concessions or exemptions to investors to encourage more rental supply.

But don’t hold your breath. The thought would never occur to politicians, who appear to believe that the only cohort in the community that warrants assistance with the high cost of dwellings is first-time home buyers.


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