• Michael Andjelkovic

22 Housing Supply is Manipulated

19th May 2018 ARTICLE of Interest

Housing Prices and affordability are dictated by both Supply and Demand. While Supply is being limited and drip fed to the market prices are being manipulated and kept artificially high (in my opinion).

The political battle to address housing affordability is not over

Coalition MPs feeling the political heat over housing affordability say the battle to bring down prices is not over, with one predicting a "war to come" unless the Turnbull government takes decisive action in the May budget.

In a rebuke of the budget's expected focus on income tax cuts and infrastructure spending, Liberal MP John Alexander told Fairfax Media that Treasurer Scott Morrison should tighten restrictions on foreign home ownership, place further curbs on investors, and allow Australians to part-own houses and apartments under a government-backed scheme.

Mr Alexander said the high cost of housing "needed to be proactively addressed rather than waiting for a war to come". Housing affordability was nominated by voters in a Roy Morgan survey released on Tuesday as one of the top economic issues facing the country. Australian Bureau of Statistics data released on Thursday showed the proportion of loans going to first-home buyers has dropped for the second time in three months, falling slightly to 17.9 per cent in February. This proportion is at a five-year high and is comfortably above the 12.9 per cent trough reached in March 2016. "From the perspective of getting first home buyers into the market, the NSW and Victorian state governments' stamp duty incentives are working a charm," said ANZ senior economist Daniel Gradwell. Median house prices remain close to $1 million in Sydney and Melbourne, fuelling internal Coalition concerns that frustrated first home buyers will be left behind. There is also growing anxiety about investors fleeing the market, potentially leading to a future shortfall in rental properties a year after Mr Morrison ordered a crackdown on interest-only loans to cool an overheating housing sector. The Treasurer took a "scalpel not a chainsaw" approach to housing affordability last year, unveiling nine measures that included allowing first home buyers to save $30,000 in tax-free superannuation for a deposit and placing new restrictions on investor deductions.

“We are implementing that plan,” he said on Thursday. “We are in the doing phase, not the talking phase.” Labor has vowed to limit negative gearing should it win the next election. The housing market has softened over the past year, with prices falling 2.1 per cent in Sydney and rising at a slower pace of 5.3 per cent in Melbourne, according to CoreLogic.

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