Housing affordability is now worst than it was when interest rates were 17% in 1989, according to the Property Council of Australia.
According to the PCA’s Improving Housing Affordability in New South Wales: A Plan for Industry and Government report, Sydney is in danger of losing its economic competitiveness if a generation of hospitality workers, transport operators, sales assistants, hospital workers, cleaners and carers do not have affordable housing options close to work.
The Property Council’s NSW executive director Ken Morrison said the great Australian dream of home ownership is now out of reach for many Australians and new home buyers have fallen by 20% over the past decade and half of those under 30 believe home ownership will never be affordable in their lifetime.
“Housing affordability is an important social problem, but it is also an economic problem and key workers are being priced out of the Sydney property market. Clearly the present approaches are not working – we need new solutions, and fast.
“We need to get the fundamental supply, demand and taxation policy settings right. Attracting private sector funds into affordable housing is critical and the paper’s flagship solutions are a securitised housing trust and a bond scheme, in partnership with government and industry,” he added.
Yesterday, the Property Council proposed 30 policy reforms in land supply, taxation, planning and savings measures, and new partnerships with the private sector in order to improve affordability.
One of the reforms proposed include fast-tracking the release of land in Sydney’s growth centres and land outside of these areas and benchmarking to always have 15 years land supply and releasing surplus government lands for affordable housing projects.
The Property Council also wants taxes lowered, to reduce the cost of land development and fund infrastructure through debt borrowing, not levies. In addition, the Property Council said stamp duties should be phased out over time and exempt land tax for key projects.
The Property Council said the Federal Government should also play a role by re-establishing the housing ministry; boosting funds for private investment in affordable housing; encouraging the Future Fund to invest in affordable housing projects and creating a sister fund to invest in social infrastructure; offering National Competition Policy style payments to the states for reforms that improve affordability.
“We need new ideas and new solutions to the affordability crisis and a new partnership between government and industry to make breakthrough improvements in affordability,“ Morrison said.
The paper also includes two flagship initiatives to attract private sector funds.
The Property Council wants to initiate a Bond Scheme Pilot Study, whereby government bonds are issued to the private sector to raise funds for investment in affordable housing by offering a ‘guaranteed minimum’ after tax return, targeting lower income earners and potentially assisting over 150,000 households per annum.
The Property Council also wants to initiate a Securitised Housing Trust Pilot Scheme, whereby the trust would finance affordable homeownership for low-middle income earners requiring a rental contribution from the occupant and a $30 million per annum contribution from government which can generate $840 million in housing assets.
By Kathryn O’Meara
