Housing problems come home to roost in Budget

With Prime Minister Anthony Albanese having pledged to do something about Australia’s housing shortage, the affordability crisis and rent stress, Housing Ministers from the states and territories met this week to hammer out policies that they hope will lead to better security of tenure and more affordable and available homes for renters.

Next week it’s Treasurer Jim Chalmers’ turn to show what levers he can pull in the Federal Budget … preferably without making any of the problems worse.

Many previous efforts to help people buy homes have backfired. Offering first-time home purchasers grants to help with their deposits can be inflationary – especially if developers just add the available financial boosters to the price tags on their properties while keeping the price tag just under the qualifying threshold.

So what else can be done to bring home ownership – or even a decent home for a reasonable rent – within reach of more people?

The government probably won’t touch negative gearing and not only because of the inevitable  political fall-out from that. As pointed out in this week’s Flat Chat Wrap podcast, negative gearing is not as commonplace as it once was because rents are so high that there are fewer negatives to gear.

However, just to take the first step, the government could consider restricting tax breaks to homes that are leased for at least a year at a time, and particularly to essential workers like nurses, teachers, ambos, police and firies.

That might push some short-term rental properties back into to residential rental pool – but probably not in numbers sufficient to make a significant difference.

In any case, Airbnb says the problem isn’t the tens of thousands of entire homes offered as holiday lets on its website and others.  Instead, they say, it’s the more than 1 million dwellings which they claim are lying empty across the country.

How do you deal with them in a Budget (if they exist)? Hit them with a supertax? You’d probably have to offer a reward to anyone who reported them to the ATO.

In Scotland, a much smaller country with a proportionately smaller housing crisis, the government is seriously considering the compulsory purchase of empty homes, to then let them to people who need them.

And that brings us to the real long-term answer to the housing shortage – the main driver of soaring rents and unaffordable homes – build more apartment blocks and make sure they are occupied by resident owners or long-term renters.

Was it really only two years ago that property experts were talking about an “apartment glut” with an excess of more than 40,000 units for rent in Melbourne and Sydney? Where did they all go?

By the way, these predictions about oversupply used to roll around every couple of years, with muted warnings in 2019 and doomsayer prophecies three years earlier.

The Federal Government has already reduced the tax on build-to-rent development, which can only help.

It has also suggested opening unused Commonwealth land for development, provided the unit blocks have a substantial percentage of homes given over to social and affordable housing.

This has prompted Julie McLean, president of Victoria’s branch of the Strata Community Association, the strata professionals’ organisation, to ask who will be expected to manage these disparate demographics. Strata committees?

As we move down this track, there needs to be some serious thinking done about the relationship between resident owners, investors, private tenants, subsidised renters and social tenants before the first brick is laid.

Predictably, the states’ housing ministers – predominantly Labor – urged the recalcitrant elements in Federal Parliament to approve the government’s proposed package of $10 billion dollars to build 30,000 homes over the next five years.

In echoes of their “all or nothing” approach that sank the Gillard-Rudd carbon credits scheme, the Greens are demanding more for their essential support.

Surely partisan posturing and political purity should take a back seat when leadership and decisive action are required. We need to stop nibbling around the edges of a problem that sees families sleeping in cars.

Whatever the budget brings, we can’t wait for developers to step up. Why would they flood the market with new homes, thereby devaluing their product?

Leadership is required and we need to stop nibbling around the edges of a problem that sees families sleeping in cars.