Politicians don’t give a damn about housing affordability: Terry Ryder

If actions do indeed speak louder than words, then politicians don’t give a damn about housing affordability.

Often you’ll see their lips moving, and they appear to care about the cost of housing, but then they’ll take actions that cause costs to rise and affordability to worsen.

Victoria’s 2016-17 State Budget provides another example of why housing is so expensive in this country and why affordability is an enduring issue (although not nearly as serious as mainstream media would have us believe, especially outside of Sydney). 

The Victoria Government has added to the taxation burden on the industry that creates new homes for families. The Property Council is right to be “deeply worried about the Government's unwillingness to deal with its property tax addiction” and to ask for a cap on property tax increases. 

Governments at all levels treat the Australian housing industry as a cash cow and in every budget they milk it more. And the cost of providing housing keeps rising, while politicians point the finger of blame at innocent parties such as foreign investors and negatively-geared Australian investors. 

“Land tax is up 28 percent, foreign investor taxes have been tripled and stamp duty is forecast to exceed $6 billion for the first time,” says the Property Council, in the wake of Victoria’s State Budget. “Melbourne cannot expect to remain Australia's most competitive city for property investment when its property tax haul is surging.

“Another area which concerns the property industry is the stockpiling of Growth Area Infrastructure Contributions (GAIC). Property developers are paying more than their fair share. It is time for the Government to provide full disclosure on where the money is being spent.”

The so-called clampdown on foreign investors is, sadly, another ploy by politicians to give the appearance of doing something about housing affordability while finding new ways to milk the property industry of revenue.

It’s a little like the Federal Government lifting the tax on cigarettes – they claim it’s to discourage smoking but in reality it’s a grab for revenue. If they were serious, they’d ban smoking altogether, just as they would ban foreign buyers if they truly believed they were the prime cause of high house prices in Sydney and Melbourne. 

Victoria has introduced new taxes to slug foreign buyers and NSW is gearing up to do the same, while pretending it’s really a clampdown on illegal activity which allegedly pumps up prices.

The NSW Government is introducing new rules from July. Buyers and sellers of real estate will have to prove their residency and citizenship status before a sale is completed. A land tax certificate showing whether any money is owed must be supplied to a home-buyer by the vendors. The vendors must disclose their residency status and nationality when applying for the certificate. Foreign buyers will have to provide citizenship and visa details, plus FIRB clearance, through the stamp duty process.

The NSW Office of State Revenue will collect the new information on buyers' nationality. This will be passed to the ATO for inclusion in a national register of foreign ownership of land titles, which begins on July 1. The ATO will match data to ensure foreign buyers have paid a $5,000 fee for any property sold for less than $1 million, and $10,000 for properties over $1 million.

The process paves the way for the NSW Government to follow Victoria in imposing foreign buyer surcharges on land tax and stamp duty in the future.

How these moves address housing affordability is a mystery.

Here’s one way it may make it worse. Deterring foreign investment, upon which many major high-rise apartment projects depend, makes it likely many projects will not be built. The reduction in supply adds to the pressures which causes prices to rise.

NSW executive director of the Property Council Jane Fitzgerald says: “Turning investors away by imposing a huge new tax is one way to ensure it doesn’t get any better. There are international investors right now considering whether to build in NSW. If they choose to go elsewhere our housing affordability crisis will worsen.”

Well, exactly. But politicians, generally inept at seeing beyond the end of their noses, haven’t thought it through to that degree.

Rather than seeing foreign investment as being part of the solution (helping to lift the supply of dwellings), they choose to see them a problem – or perhaps, more correctly, as an unpopular minority to blame without losing votes.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.