By Ingrid Fuary-Wagner, Domain News Editor. It was the budget centrepiece of 2017: A grand gesture to tackle housing affordability.
The government introduced measures to give first-home buyers a leg up onto the property ladder with a super saver scheme; older Australians were encouraged to downsize from their large empty homes with tax incentives; more supply was promised; and a limit was placed on foreign buyers snapping up new apartments.
This year there was no such grand gesture; and scant acknowledgement of any such problem.
To the disappointment of all would-be first-home buyers and those struggling in the rental market, instead of using this rare window to repair a broken housing market, the treasurer played his get out of jail free card.
House prices in the country’s hottest markets came off the boil just in time to let the government off the hook for this year’s budget.
After growing by about 80 per cent since 2012, Sydney house prices took their biggest hit this year since 2015, with a 2.6 per cent drop over the last quarter. In Melbourne, prices mellowed, with growth stalling to just 0.1 per cent.
While state-based initiatives and the Australian Prudential Regulation Authority’s crackdown on bank lending have no doubt had the strongest effect on prices, the federal government will no doubt be patting itself on the back for a job well done.
But with our population skyrocketing, a property market with a history of short-lived cyclical downswings, and several economists predicting prices to rise again in 2021, it’s a problem that’s not going away.
AMP chief economist and head of investment strategy Shane Oliver agreed that while house prices may have fallen, the government shouldn’t turn its back on a persistent problem.
“It’s more important than ever to focus on this. Affordability is still very poor even though prices have come off the boil,” he said.
“We probably need to see several years of 4 per cent declines [to help with affordability], given prices have risen about 80 per cent in the past six years.”
It’s easiest to huff and puff when a crisis is in full swing, but it takes vision and courage to make necessary progress — for renters, first-home buyers, pensioners and the homeless — when a dip in house prices has let them off the hook.
The government needs to tackle deteriorating affordability among renters by bolstering affordable and social housing, as well as offering more meaningful concessions for first-home buyers. Negative gearing and capital gains tax reform remain off the table, unless things change at the next election.
Until then, it appears the government has largely done all it wants to on housing affordability.