Housing affordability solution is supply: HIA

The Housing Industry Association has stressed the need for supply focused solutions, in light of Labor’s recently announced policy plans to address the country’s housing affordability challenges

Housing affordability solution is supply: HIA
The answer to Australia’s housing affordability problem lies with supply not demand focused solutions, says the Housing Industry Association.

“Attempts to remove demand for new housing will reduce supply, affordability and jobs,” said HIA’s deputy managing director, Graham Wolfe.

He said although several measures in Labor’s recently announced plans to improve housing affordability aim to increase supply of new homes, those targeting demand will have an “adverse impact” on affordability.

The Opposition’s eight-point plan includes building more than 55,000 new houses over three years but also penalising investors with empty properties and banning SMSFs from directly borrowing to buy property. 

“We can’t address housing affordability nationally with both eyes solely on Sydney and Melbourne,” said Wolfe. “Sydney house price increases have been driven by many factors, including significant population growth, a ten-year supply recession, low interest rates and the impact of extremely high stamp duty costs on sales in the established housing market.

“The dynamics in Perth, Adelaide, Northern Queensland and Darwin are very different. Foreign investors and self-managed superannuation fund investors cannot be blamed for the recent fall in house prices in Perth and Darwin, or the slower level of new housing activity in Adelaide. Inflicting demand side measures on these capital cities ignores the significant negative impact on housing supply, jobs and economic growth in these economies.

He said to properly address housing affordability other policies need to include “a reduction in the imbedded taxation on new housing, government funding to support infrastructure and reforms to address unnecessary planning delays in bringing new residential developments to market.

“Our national housing affordability challenge is complex, and necessitates a national ‘cost of housing’ inquiry to identify impediments to the supply of new housing. Such an inquiry would bring together the overlapping impact of regulations, taxes and barriers imposed by all three levels of government, and importantly, inform governments in developing cohesive, integrated and responsible housing reforms, measures and programs,” said Wolfe.