The government should address housing affordability in 16 ways, according to a new report.
Do you think house prices have gone crazy? You're not the only one who feels this way. That's why, in Canberra, a study with 16 suggestions to address housing affordability has recently arrived on legislators' desks. We'll go through them with you today (succinctly, we promise).
It’s crucial to emphasize that CoreLogic isn’t implying that home prices are poised to plummet.
Not at all.
Instead, CoreLogic believes the housing market is “going past a peak rate of growth,” with capital gains “gradually tapering over the following months.”
“Overall, we expect house values to climb throughout 2021 and most certainly throughout 2022,” says CoreLogic’s Head of Research Tim Lawless, “although not at the unsustainable speed that has been seen in recent months.” The seven signs they’ve discovered are listed below.
Stamp duty should be replaced with a land tax.
The committee advises that states and territories replace stamp duty with a land tax.
This should be phased in over time so that those who have previously paid or recently paid stamp duty are not subjected to double taxation.
This reform, according to the committee, would boost housing turnover, remove an unnecessary barrier to homeownership, and stabilize government revenue.
In the meanwhile, states and territories should conduct a transition study and alter stamp duty brackets to correct decades of stamp duty bracket creep.
First home buyers to use their super as security for home loans
The committee recommends that the Australian government allow first-time home buyers to utilize their superannuation as collateral for home loans.
“Allow first-time home purchasers to use their superannuation balance as security for a home instead than utilizing the funds themselves as a deposit, hence extending home buying opportunities,” the committee recommends.
“As a result of our recommendation, the main barrier for property buyers, the deposit, will be removed.”
However, the committee cautions that this idea should only be adopted in conjunction with some of the other housing-related proposals on the list.
“An increase in households’ ability to borrow, on the other hand, would almost certainly increase property values,” they continue.
Affordable rent-to-own housing
The Australian government should put in place programs to encourage private-sector partnerships in the delivery of rent-to-own or low-cost housing.
According to the research, “this will diversify the housing market as well as provide affordable housing options for low to middle-income workers, persons suffering homelessness, women fleeing domestic violence, parents, and children.”
Other suggestions made by the committee
Increase urban density in appropriate locations: specifically areas well-serviced by under-used transport infrastructure.
Incentivise planning and property administration policies: provide incentive payments to state and local governments to encourage better planning and property administration.
Pay states and localities to deliver more affordable housing: grants could be in the form of cash or infrastructure.
Adopt recommendations from the Inquiry into homelessness.
Increase the supply of critical housing such as crisis housing.
Don’t mess with negative gearing: the committee recommends the Australian Government not change its current negative gearing policy.
Reform developer contributions: work with state and territory governments to reform developer contributions, so value-adding and in-demand infrastructure is delivered.
Review the build-to-rent housing market: in particular how it’s affected by current regulations and tax policies.
APRA to continue monitoring lending standards.
No changes to the RBA’s charter: ensuring that house prices are not a specific objective of monetary policy.
Up-to-date forecast data: implement ways to get more up-to-date forecast data on population, housing approval and completions.
Unlock new housing supply: concessional loans to infrastructure projects and community housing providers that will unlock new housing, particularly affordable housing.
But here’s the most crucial point: You don’t have to wait for the government to act on the aforementioned recommendations in order to succeed in the real estate market.
Most states provide subsidies and stamp duty concessions/exemptions to help first-time home buyers get a leg up.
From July 1, a variety of federal government choices, such as the popular First Home Loan Deposit Scheme and New Home Guarantee programmes, will be available again, allowing first-time home purchasers to buy a home four to 4.5 years sooner on average.
That’s right, it’ll be four years earlier!
So, if you’d want to learn more about how to overcome housing affordability challenges, contact us immediately – we’d be happy to assist you in devising a strategy.
To learn more, contact Premium Finance Group Australia at (07) 4720 8888 or email us at firstname.lastname@example.org
Disclaimer: The content of this article is general and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your situation and may not be relevant to circumstances. Before taking any action, consider your particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.