A major mortgage brokerage has said the government should form 10-year housing development targets and limit excessive tax concessions to investors in order to combat declining home ownership.
Mortgage brokerage
Aussie thinks it is essential to address housing affordability as residential real estate is the primary wealth accumulation source for most Australians, with a combined asset value of $5.2 trillion. This easily outstrips superannuation, which has $1.8 trillion.
The paper, submitted to the Murray Inquiry by Aussie executive chairman John Symond, gives four recommendations on how to improve home ownership rates for Australians.
The first is to include annual new housing development targets and infrastructure plans in the federal budget process with a 10-year view.
This would determine where new developments should occur, which constraints around land releases the government needs to address, and what natural growth and replacement will occur.
“…Supply targets cannot be adequately or efficiently addressed by metropolitan creep together with marginal increases in housing density and small regional expansion,” said the submission.
Aussie also said the government should limit excessive tax concessions like negative gearing and the CGT discount to investors, as these have an inflationary impact on property prices.
To help limit the impact of negative gearing concessions, there should be controls on the number of applicable properties or a ceiling on the amount of losses deductible in a year, Aussie said.
Aussie questioned how appropriate stamp duty is on residential property transactions, recommending a reduction and instead a broad property tax levied on all residences.
“The extent of the duty is sufficient to discourage relocations that would drive the most efficient use of land. The strongest example of this is the deterrent to ‘downsizers’ who might otherwise be freeing up larger residences to accommodate young families.
"To create the most efficient use of residential property Australian should be seeking a system that encourages home owners to be flexible and to find the housing most suitable to their present needs.”
Aussie also recommended reducing funding costs for new housing development by implementing a phased charge for infrastructure.
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