A group of academics has challenged the mantra of governments since the 1980s that the provision of housing is “best left to the market”, saying this will no longer wash.
They say the government intervenes on the housing market on a huge scale through tax concessions, such as negative gearing.
“Unfortunately, these interventions largely contribute to the housing unaffordability problem rather than its solution,” the group has told the Conversation online magazine.
They say while action to maximise supply is unquestionably part of the required strategy, they have described it as a “lazy fallacy” to claim that the solution is simply to “build more homes”.
The academics – from the universities of NSW, Sydney and Western Sydney – say where maximising housing supply can directly ease housing affordability is through expanding the stock of affordable rental housing for low-income earners.
But one of the key reasons for the present predicament is that the prime function of housing has transitioned from a usable facility to a tradeable commodity and investment asset.
“Policies designed to promote home ownership and rental housing provision have morphed into subsidies expanding property asset values,” they say.
They have offered a 10-point plan to tackle housing affordability, including replacing stamp duty with a property value tax and phasing out negative gearing.
10-POINT PLAN TO TACKLE HOUSING AFFORDABILITY:
- A phased reduction of existing tax incentives favouring rental investors, such as negative gearing and capital gains tax liability.
- Redirect the additional tax receipts from reduced concessions to provide affordable rental housing and offer appropriate incentives for prospective home buyers with limited means.
- Develop financing arrangements, such as government-guaranteed housing supply bonds, while actively engaging with the super funds and other institutional players who have shown interest in investing in rental housing.
- Replace stamp duty with a broad-based property value tax.
- Expand availability of more affordable hybrid partial ownership tenures, such as shared equity.
- Implement the Henry Tax Review recommendations on enhancing rent assistance to improve affordability for low income tenants especially in the capital city housing markets.
- Reduce urban land price gradients which compound housing inequity and economic segregation and instead encourage targeted regional development.
- Continue to simplify land use planning processes to facilitate housing supply.
- Require local authorities to develop local housing needs assessments and equip them with the means to secure affordable housing targets within private housing development projects.
- Develop a costed and funded plan for existing public housing to see it upgraded to a decent standard and placed on a firm financial footing within 10 years.