This SMH news today rankled me initially:
Liberal MPs are demanding the federal government consider radical plans to bring the runaway housing market under control after new figures showed the value of the nation’s homes soared by a record $450 billion in three months.
Sydney MP John Alexander said some of his own government’s policies were feeding into dysfunctional property market while Melbourne MP Tim Wilson said the tax system has to be overhauled to bring some balance back to house prices.
Some choice grabs from teh traitors:
Mr Alexander said all governments had to work together to put in place policies that would gradually bring house prices down to about three times annual household income. In parts of Sydney, they are currently at 17 times income.
…very strange. Housing affordability never means prices going down. It might mean everything else, but not prices down. I wonder if John was misquoted??
He believes an independent authority should set the proportion of losses an investor could deduct for their investment properties, based on trends in the property market.
Similar to how the Reserve Bank targets an inflation rate of between 2 and 3 per cent, this authority could be able to reduce deductibility to 50 per cent of expenses when investor activity is driving up house prices.
Willo is a bit better, with more-standard EZFKA fare:
Mr Wilson is also concerned about housing affordability, warning if people can’t afford to buy then more rising rental costs will lead to a higher need for social housing.
“There are too many factors driving money into homes to think if we just tinker with supply, prices will decline – the biggest barrier for young Australians to buy their first home is saving enough for a deposit while renting,” he said. For this reason, Mr Wilson wants first home buyers to be able to tap into their superannuation for a deposit.
good reasons from Wilson to do nothing-much on supply, and main concern is about maybe having to build social housing and the cost of it.
but this bit is strange and unexpected:
He also wants a rebasing of the tax system, with the same rate of tax applied to income also applied to capital growth. Several other Coalition MPs support his push, including Senator Gerard Rennick who wants capital gains tax charged on homes sold for more than $2 million.
this is, essentially undoing negative gearing. But in a bad way – pinging capital growth (which is high) rather than interest (which is low).
(So what’s the trick here? If it were me, I’d be smart with the commencement date. Eg – capital gains only to be counted after a particular future day (ie all-time-highs))
thankfully Labor is taking the other side, to provide EZFKA units with electoral choice…
Labor’s housing spokesman Jason Clare said the federal government could take some pressure out of the market by backing the efforts of NSW and the ACT to get rid of stamp duty.
“A bit of leadership from the federal government is desperately needed here. Getting rid of stamp duty is a good idea and the federal government could help coordinate this across the country,” he said.
…the choice to untax housing even further and put more money into buyers’ (and therefore sellers’) pockets
what to make of all this? Well, my immediate guess is that LNP is preparing the ground for a stunt/pantomime ahead of the upcoming election. For example – thanking the above mentioned MPs for their input and announcing an inquiry to look at a wide range of housing affordability measures. Such inquiry to report after the election, with findings to sit on the shelf for a long time. Or forever.