They say "Build more dwellings if you want to cool the housing market". That's false reasoning. One could build a million more houses and investors will just snap them up. Investors then increase the rental fees and genuine home buyers are locked out once again. The only way to stop this nonsense is to stop subsiding negative gearing using taxpayers money. But the gummint are frozen stiff scared of upsetting investors votes hence they do nothing.
‘Act urgently now’: Why sky-high house prices are a problem for everyone By Elizabeth Redman March 24, 2022 https://www.smh.com.au/property/new...e-a-problem-for-everyone-20220323-p5a78b.html Talking points A new inquiry recommends increasing the supply of new homes to improve housing affordability. Experts back the call but would also like to see changes that reduce investor demand. If home ownership rates don’t improve, Australia risks a deepening social divide. Fixing housing affordability is an enormous task, but it’s too important not to get right. Another review has laid bare the challenge for first-home hopefuls facing skyrocketing property prices, combined with rising rents and scant interest on their savings. The great Australian dream has fast become a nightmare for many.Credit:Louise Kennerley There have been so many reviews that “submitter fatigue” was acknowledged in the latest version, the inquiry into housing affordability and supply in Australia, chaired by Liberal MP for Mackellar Jason Falinski. He represents the Northern Beaches, where house prices shot up 36.9 per cent last year to a median $2.82 million, on Domain figures. Housing prices more broadly rose at about 10 times the pace of wages last year, leaving renters around the country wondering if they could ever own a home – or asking for help from the bank of mum and dad if they were lucky enough. Others moved from capital cities and bought in regional centres, freed from daily office attendance by the rise of remote work, pushing up prices for the locals who were already there. A young couple on the average income who could save 20 per cent of their after-tax earnings towards an entry-level house would need to save for more than eight years in Sydney, six and a half in Melbourne, and five years and eight months as a capital city average, research this week found. The inquiry noted that prices rose at the fastest pace since 1989 last year, while young people and low-income earners took a bigger hit to their finances in the pandemic than other groups. But it’s not only an issue for first-home buyers, and their parents, and renters who would like to buy but can’t. Falling rates of home ownership risk deepening social divides, and could increase the burden on taxpayers to support retired renters who quite sensibly cash out their super, buy a modest home, and draw the age pension. Demand is strong for housing and a boost to supply could help meet it.Crediteter Rae What could help? Recommendations from the inquiry are heavily focused on increasing the supply of new homes to keep pace with a growing population and stop competition for scarce dwellings pushing prices higher, a task that experts say could take a decade to move the needle. For example, higher density housing near public transport, combined with better infrastructure for local communities. Federal incentive payments to state and local governments to streamline planning approvals and increase supply. Also, using superannuation as collateral for a home loan, and replacing stamp duty with land tax. The recommendations were so controversial that Labor members of the committee issued a dissenting report that highlighted their party’s policy of a $10 billion Housing Australia Future Fund to build social and affordable housing. Independent economist Saul Eslake said the recommendations might help over an eight- to 10-year time frame, as constraints on new supply are an issue for housing affordability, but took issue with the scope. “While there are things that can usefully be done in that area, trying to solve the housing affordability problem solely from the supply side is like being in a boxing match with one hand tied behind your back,” the principal of Corinna Economic Advisory said. “Government policies which have served to inflate demand have also contributed to the deterioration in housing affordability and the decline in home ownership.” He was wary of adding super savings to buyers’ deposits, but backed an end to stamp duty and a quicker planning process. He would also like to see all first-home owner grants abolished, an end to the negative gearing tax break and a wind-back of the capital gains tax discount – a wish list he knows is unlikely. Australia risks a divide between those who can buy property and those who can’t.Crediteter Rae “It’s really hard. And yet if we don’t, we will see a widening gap in terms of wealth between the young and the old, and our retirement income system will be at significant risk because our retirement income system has an unstated but nevertheless crucial assumption that the vast majority of retirees will have close to zero housing costs,” he said. That is, a growing proportion of people who are not yet at retirement age will not achieve homeownership, or will not have paid off their mortgage by retirement age, and will use their super for housing and depend more on the age pension, he said. Grattan Institute economic policy program director Brendan Coates also backed the supply side recommendations, after submitting evidence to the inquiry that building an extra 50,000 homes a year for a decade could result in house prices and rents being up to 20 per cent lower than they would have been otherwise. “The work showing supply is a problem is pretty robust,” he said. “It’s arguably the biggest constraint on housing affordability. “What’s unfortunate is the report denies the role of negative gearing in reducing rates of home ownership in Australia.” Reforming negative gearing tax breaks and the capital gains tax would have a modest impact on prices, but a larger impact on home ownership, as it would reduce the amount of investors that first-home buyers must compete with at auction, he said. The super-for-housing plan would need to be targeted, he said, adding the poorest 20 per cent of 25 to 34-year-olds typically have next to no super. “Tax measures would move the needle quite quickly,” he said. “Things like stamp duty reform, land use planning – they will have a big impact in the long term, which is why you should start them now.” He says reforms to both supply and tax are needed, on an issue that is too important for partisanship. “Falling rates of home ownership risk transforming Australian society – if you see the rate of home ownership fall among poorer Australians, a growing division of housing between the haves and have-nots, that’s going to have repercussions that will last for decades,” he said. “Owning your own home is the best guarantee of avoiding poverty in retirement. “We’ve got a ticking time bomb of rising poverty in retirement among renters and that’s the big risk, and that’s why we need to act urgently now.”
Meanwhile, across the ditch.... https://www.bloomberg.com/news/arti...ge-repayments-as-rates-jump?srnd=premium-asia Kiwi Home Owners Face Soaring Mortgage Repayments as Rates Jump By Sherry Zhang 25 March 20 New Zealand mortgage rates are set to rise above 5% for the first time in seven years, damping economic growth and exerting further downward pressure on a cooling housing market. The interest rate on a two-year fixed mortgage may rise as high as 5.5% by the end of this year, according to a survey of economists at New Zealand banks by Bloomberg News. One-year fixed mortgage rates are also expected to climb above 5%, more than doubling from their lows last year. New Zealand households are already being squeezed by the fastest rise in living costs in more than 30 years. The jump in mortgage rates will further reduce spending power just as falling house prices make consumers feel less wealthy, increasing the risk of the economy stalling. “The New Zealand economy has been famously described as the housing market with an economy attached, it has massive implications for how households behave,” said Sharon Zollner, chief New Zealand economist at ANZ Bank in Auckland. “There’s a wealth impact on consumers’ willingness to spend.”........
Putney knockdown sells for $3.42 million at auction, topping 2020 sale price by $760,000 By Kate Burke March 26, 2022 https://www.smh.com.au/property/new...20-sale-price-by-760-000-20220325-p5a831.html 4 Wade Street, a 695-square-metre block offering water views and development approval for a new three-storey home. An original cottage in Putney sold for $3.42 million at auction on Saturday.Credit:Flavio Brancaleone It was one of 917 Sydney properties scheduled for auction in Sydney on Saturday. By evening, Domain Group recorded a preliminary clearance rate of 68.2 per cent from 623 reported results, while 148 auctions were withdrawn. Withdrawn auctions are counted as unsold properties when calculating the clearance rate. Bidding on the long-vacant, three-bedroom cottage was quick to start, opening with an offer of $2.8 million, above the $2.75 million price guide. It climbed in mostly $50,000 and $25,000 jumps to $3.25 million, passing the $3.2 million reserve, as four of the 11 registered bidders made offers. As auctioneer Matthew Harvey was set to bring down the gavel, a fifth bidder joined the competition, and he and the eventual buyer pushed the price another $170,000 to the $3.42 million sale price. Eleven buyers registered to bid on the home, with five making offers.Credit:Flavio Brancaleone The property was sold to a family from Baulkham Hills that plans to build its dream home on the site. “We had stopped looking [for a home] for a while … then my husband saw this last Thursday,” said Heidi, who withheld her surname for privacy reasons. “We extended ourselves to get it … stretched quite a lot.” It was the fourth time the property had sold in less than a decade, last trading for $2.66 million in December 2020.
Politicians ‘addicted’ to buying votes. Take spending out of their hands! By Matthew Knott March 27, 2022 Australian politicians are so addicted to using infrastructure spending to buy votes that responsibility for nation-building projects should be taken out of their hands and assigned to an independent authority, departing Liberal MP John Alexander says. The former professional tennis player and television commentator, who is retiring after 11 years in Parliament, added that both major parties had let voters down by failing to establish a federal anti-corruption commission during the current term of Parliament....... https://www.smh.com.au/politics/fed...nding-out-of-their-hands-20220325-p5a7wc.html
Unpopular Morrison to avoid Sydney’s most marginal Liberal-held seat By Michael Koziol March 27, 2022 Prime Minister Scott Morrison will steer clear of the Liberal Party’s most marginal Sydney seat during the election campaign, leaving it to his more popular Treasurer, Josh Frydenberg, to help first-term MP Dave Sharma in the battle for Wentworth. Former prime minister Malcolm Turnbull, who held the seat for 14 years, will also be absent from the campaign, saying he will probably go overseas, and noting many traditional Liberal voters felt Mr Morrison “does not represent their values”....... https://www.smh.com.au/politics/fed...rginal-liberal-held-seat-20220325-p5a81k.html
‘Pure electioneering’: First-home buyer help will increase property prices, experts warn By Tawar Razaghi March 31, 2022 https://www.smh.com.au/property/new...erty-prices-experts-warn-20220330-p5a99w.html Talking points Housing experts warn the first-home buyer help in the budget will push up property prices. Increasing rent assistance could have helped low-income households, they said. The prime minister said: “The best way to support people who are renting a house is to help them buy a house.” Housing experts have criticised the federal government’s failure to seriously address housing affordability in the budget, warning its measures will push up prices and won’t help low-income households. The Morrison government’s last budget before the federal election expanded the Home Guarantee Scheme (formerly known as First-Home Loan Deposit Scheme) to 50,000 places a year for the next three years, allowing first-home buyers, single parents and regional Australians to get into the property market with a deposit as little as between 2 and 5 per cent. The main budget measure addressing housing affordability is the Home Guarantee Scheme.Credithoto: Peter Rae But experts say the extension of the scheme will do little more than increase property prices, and reveal the failure to address structural issues such as building the half a million homes needed to meet the chronic shortage of supply in the country. Their comments came as Prime Minister Scott Morrison was asked on Wednesday why the budget offered no assistance targeted at renters, who have seen costs rise, particularly in regional areas. Mr Morrison said the budget was “about Australians getting into homes”. “The best way to support people who are renting a house is to help them buy a house,” Mr Morrison told Channel Nine. “People who are buying houses are renters, and ensuring that renters can buy their own home and get the security of home ownership; that was one of the key promises of this budget.” No measures were announced that increased housing supply.Credit:Nic Walker RMIT University’s emeritus professor of environment and planning Michael Buxton said the budget measure was “pure electioneering” at the expense of new-home buyers and more affordable housing. “Every time the government announces assistance packages for home buyers it just goes on to the price of housing because developers simply raise the price of the house and land packages they are selling. All these home buyer grants do is stimulate demand, which increases pressure on the supply of houses and prices of housing products. Governments know this. But they get a free kick just before the election, so they keep on making the same mistake and adding significantly to the price of housing in the longer term.” Independent economist Saul Eslake said schemes that purportedly help first-home buyers, such as the First Home Guarantee, made little sense in addressing affordability. “Anything that allows people to spend more on housing results in more expensive housing. We have more than 60 years of history to support that,” Mr Eslake said. “I don’t think it’s any coincidence that Australian homeownership rates peaked after that first scheme was introduced and have been going down ever since.” He believed the federal government cared little about actually improving housing affordability. “For all the crocodile tears politicians shed for aspiring first-home buyers … the reality is there aren’t many of them compared with the vastly greater number ... who own one property [and] who benefit from rising property prices. “The point is, given that politicians do appear to be so concerned, why do they keep doing things that make it worse for [first-home buyers]?” Housing experts agreed that the scheme would put upward pressure on prices.Crediteter Rae. Mr Eslake also raised concerns the government was increasing a scheme that allowed first-home buyers to take out a home loan “on wafer thin margins” at a time interest rates were expected to rise, risking negative equity for the individuals and potentially calling on those guarantees for the government. “You might have thought that someone in Treasury would have advised them against it. Is it really a smart idea to encourage people with limited financial means to borrow on limited equity, especially after house prices went up an enormous amount and interest rates are about to start going up?,” he asked. RateCity modelling found if someone bought in Sydney using the scheme at the end of this year, they could potentially find their equity, which started at 5 per cent, drop to -6 per cent by the end of 2024, based on Westpac forecasts of a fall in property prices. University of Sydney professor of urban and regional planning Nicole Gurran said the budget announcement was nothing more than a symbolic measure. “Unfortunately simply guaranteeing ever larger home loans is almost exactly the opposite of what you’d be doing if you want to extend homeownership in Australia. It’s not even targeted towards new supply.” ‘It’s a real insult, particularly the ongoing subsidy to landlords in the form of negative gearing.’ Professor Nicole Gurran She said it was a lost opportunity that there were no increases to Commonwealth rent assistance, which would help low-income renters in the private market or community housing. “That could have really addressed cost of living pressures,” she said. “It’s a real insult, particularly the ongoing subsidy to landlords in the form of negative gearing.” The Grattan Institute’s economic policy program director Brendan Coates said the scheme was a double-edged sword. “You’re solving the deposit hurdle, which is a big problem for many young Australians … the challenge is it’s a big expansion of the scheme, so it is likely to put upwards pressure on price,” he said, adding that it would only help those who are already likely to enter the market. With a pre-tax salary of $125,000 for single applicants and $200,000 for couples, the income thresholds were too high as well, he said, capturing between 80 and 95 per cent of working-age Australians. He said ultimately the budget highlighted the government’s lack of appetite for real housing affordability reforms. “It reflects our diminished ambitions for affordable housing. It’s clearly a problem because politicians keep announcing policies that are purported to solve the problem. The issue is they’re not taking tough decisions that they need to make in the long term,” he said, suggesting that tackling capital gains tax and negative gearing would be one measure. “If a first-home buyer is to win, then somebody has to lose, and that means prices have to go lower, which obviously hurts those who already own property and that is a political reality.“ Housing Minister Michael Sukkar said in a statement that 60,000 Australians had already been supported into home ownership under the Home Guarantee Scheme. “We want to help even more Australians into their first home or a home that they’ve built for their family, which is why we are expanding the scheme,” he said. “The government also expects to spend $5 billion on Commonwealth rent assistance and is working jointly with the states and territories to improve housing outcomes as a priority under the $1.6 billion a year National Housing and Homelessness Agreement, as part of an expected Commonwealth housing spend of $9 billion in 2021-22.”
Palaszczuk rules out new valuations for flooded homes Mark Ludlow Queensland bureau chief Apr 1, 2022 Residents in low-lying suburbs whose homes were inundated in the February floods face big hikes in land tax and council rates because the Palaszczuk government will not ask Queensland’s Valuer-General to revalue the properties to reflect the disaster. After the 2011 south-east Queensland floods, the state government paused the valuation process and ordered a post-flood assessment so property owners would pay tax according to the deflated value of their homes. But that will not be repeated. Houses in Oxley and Goodna, west of Brisbane, were inundated in the floods. Liam Walsh The decision to push ahead with this year’s valuation has been criticised by resident groups and Brisbane Lord Mayor Adrian Schrinner, who said it was a “slap in the face” for the 24,000 properties affected by the worst floods in a decade. “It’s crystal clear that this state government is about to cash in on a massive land tax grab from flood affected areas, which is why they have no interest in using the latest, post-flood valuations,” Councillor Schrinner said on Friday...... https://www.afr.com/property/reside...-valuations-for-flooded-homes-20220401-p5aa2j
It's appears more and more obvious to me, governments are deliberately attempting to force up realeastate prices to prop up their coffers.