Scott Morrison advises housing affordability is not a new problem

Scott Morrison advises housing affordability is not a new problem
Scott Morrison advises housing affordability is not a new problem

Housing affordability is not a new problem, and as the Federal Treasurer Scott Morrison pointed out, he like anyone in Sydney has actual experience that it has actually never been easy to buy a home.

He rightly argues, dealing with housing affordability must involve a scalpel, not a chainsaw given the likely or unintended consequences of some policy.

He warns declining housing affordability can't be answered with lower economic growth.

It is likely the housing affordability will be an important policy focus of the Turnbull Government May budget.

And to try to shape the agenda, the Treasurer gave a 4600 word speech this month to outline some of the issues.

I took four nuggets from his speech to the Australian Housing and Urban Research Institute which highlight the complexity of it all.

1) Some two million taxpayers in Australia have an interest in a residential investment property. Around 72 per cent own just one property and 90 per cent own no more than two. Less than one percent of investors have six or more investments. Around 1.3 million of these taxpayers negatively gear, including 58,000 teachers and one in five police officers. 

2) Mum and dad investors are putting a roof over the head of around a quarter of all renting households in the country. If mum and dad investors were not part of our private rental market, there would be fewer rental properties available, meaning higher rents. Morrison notes disrupting negative gearing would come at a cost, especially to renters. It would not be good news for the 30 per cent of Australian households who rent. 

3) Morrison said you can't help first homebuyers save for a deposit by implementing policies that increase their rent. Over 85 per cent of private renters move within five years and almost one third of moves are forced. Around 47 per cent of low-income rental households in our capital cities spend more than 30 per cent of their household income on housing costs. His concern for families with children who need housing stability to have beneficial access to schools and medical assistance suggests we need longer term leases. 

4) Australian residential property investment is more geared to capital gain than yield. Morrison sees the need to establish a new institutional investment class as is occurring overseas. Property needs to be a longer term fixed interest investment that can comfortably sit within institutional investment portfolios and Australian super funds. 

"Previous governments have avoided dealing with these issues for fear of raising and disappointing expectations," Morrison concluded, adding that failure to confront these issues in the past can be traced back to the problems we face today. I only hope he hasn't overly raised expectations.

Morrison's first property purchase cost $330,000 with his wife, bought in Bronte in 1995, where he grew up as a child, and then they upgraded to the Shire at $920,000 in 2009.

This article first appeared in the Daily Telegraph. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

Housing Affordability Scott Morrison

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