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SWIFT and creative action is required from governments across Australia in tackling the growing headache of housing affordability, according to Urbis chief economist Nicki Hutley.
“It’s going to take nine years or more for the average income earner to save for a deposit. And even though mortgage interest rates are quite low, it’s that deposit that’s putting so many kids out of the market,” she told attendees of the Australian Property Institute and REIV’s 2017 State of the Market event in Melbourne on Friday.
“But we can think about new housing models – shared equity models, better support for new homebuyers, not necessarily in the grant form, but there are other policies; getting rid of stamp duty for example.
“It’s some tough times ahead but also the economy’s not doing that badly overall, so we should feel relatively calm. We have the wherewithal to deal with these policies and I think we should tackle them while we’re in a state that the economy is looking good, interest rates are going to remain steady, the Australian dollar’s quite supportive,” Hutley said.
“So let’s tackle those big policy issues now, while we can and while the economy is supportive of us taking those decisions,” she added.
Amidst the current uncertainty consuming world politics, namely the election and executive orders of Donald Trump, Brexit and other issues throughout Europe, and China’s steadying off, Hutley said the main worry regarding Trump is how he would handle trade.
“Will he implement trade wars? Possible; possibly there could be something with China. I think his abandonment of the Trans-Pacific Partnership will have less of an downward impact on Australia than it has on many of the other countries that are in that partnership, so I’m less worried.
“If he starts a direct trade war that’s not going to be good for anybody, but, assuming that doesn’t happen, Australia’s own circumstances are not too bad. We’ve actually got growth at around our potential level, at just under 2.75% to 3%; it’s being driven by consumption, by housing, by government expenditure,”
“The big-ticket item that’s still missing of course is what’s happening with investors – why aren’t businesses coming to the party more? Well, perhaps because there’s too much spare capacity in the economy, perhaps because they’re too worried about the uncertainty or perhaps because they think that growth is not going to give that shift up, so we’re in a little bit of a vicious cycle and we perhaps need something to tick it up.
“But if we’re looking to fiscal policy to do that, I think we’ll be looking for a long time. The government needs to get its fiscal house in order, and it’s pretty committed to doing so, so I think this May budget’s going to be a pretty interesting one for us,” Hutley said.
Australian Property Journal
