Australian states should ditch stamp duty and replace it over time with a broad-based land tax, review the taxes holding back development of the emerging build-to-rent sector and reform surging developer contributions that are not being used to fund crucial local infrastructure.
The recommendations are some of the measures outlined in a report tabled on Friday following the House of Representatives Standing Committee on Tax and Revenue’s inquiry into housing affordability and supply in Australia.
The report primarily slams poor planning processes – which inquiry chairman Jason Falinski MP described as “oppressive regulation, muddle-headed central planning, officious big state regulation” – for a fall in homeownership among Australians under 40 to the lowest level since 1947.
At a time of record-low borrowing costs that pushed housing prices nationally up 22.1 per cent last calendar year alone, however, economists question whether supply measures by themselves can bring the market back into balance.
“More expansive supply will help – but in the face of a large increase in demand, it will only help, it will not eliminate the increase in house prices,” RBA assistant governor Luci Ellis last year told the inquiry last year.
On Friday, Mr Falinski said that criticism was right in the short term.
“You can’t just build houses in three months,” he said.
“But over the medium term, what you’d see is house prices coming back to what their long-term average should be. You’d start to see prices beginning to moderate within two years. Over ten years you would start to see real changes, meaningful changes in affordability.”
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