On housing affordability

I am astounded to read that Queensland Deputy Premier Anna Bligh recently put the construction industry ahead of water, soil, freedom and survival. This expansion HAS to be stopped before it destroys us, yet this fool of a woman (do they only promote really stupid non-analytical women to positions of power) is prepared to accelerate our collective doom. "The only way we could really (stop population growth) is to put a fence up at the (Queensland) border, or to cancel or freeze all new home building approvals," she said. "That would have a very serious impact on the construction industry that a lot people rely on for jobs." said planning-challenged QL Dep Premier Bligh.

Who are these people governing for? Certainly not the land or the people. Are they simply living in a fantasy world? Government by psychotics.

According to the Real Estate Institute of Australia (REIA), the answer to Australia's housing affordability crisis is to release more land for development and to water down 'draconian' planning laws that add to the cost of building a new house. Of course they'd say this. If you work on the assumption that demand will (and should) grow ad infinitum, you must meet the demand. And if rapidly growing demand keeps prices high, then the best way to deal with that is not to dampen demand (heaven forbid!), but to build shoddier houses and suburbs at cheaper cost. A look at Canberra's suburban development is enlightening. The older (inner) suburbs were subject to strict planning requirements. Such suburbs are characterised by large blocks, tree lined streets and plenty of open space. Despite some recent changes allowing dual occupancy - they remain lovely places to live. As you move north or south, you can see the effects of the of eroding planning requirements over time. The blocks get smaller, the proportion of public space is reduced, the proportion of medium density housing increases. In Banks and parts of Belconnen, the streets are narrow, the blocks are tiny and in general you feel like you could be in any of the mushroom suburbs in Sydney's north-west. There's no concession to local conditions in the architecture. And for all that, the houses are STILL less affordable than they were in the 60's when 'draconian' planning restrictions were firmly in place. Frankly, the REI's ideas amaze me. I can't imagine how proposals so blatantly self-serving and at odds with the interests of the community can be seriously considerded. So what could a responsible Government do to address the problem of housing affordability? Here's 4 ideas to begin with.. 1. Reduce population growth. Preaching to the converted on this site, so i don't think this needs any elaboration. 2. Scrap negative gearing for investment properties. Negative gearing on investment housing encourages people to purchase multiple dwellings. The extra demand that's generated by people wanting an investment property artificially inflates prices, putting the price of simpler properties ('starter' houses) out of the reach of first home buyers. The REI perpetuates the myth that if you stop negative gearing on investment properties, the sky will fall. They claim that Keating's half-hearted rollback in 1985 resulted in a massive jump in rents and subsequent disaster for all concerned. Problem is, that story's just bunkum - as explained by Ross Gittins.. http://www.smh.com.au/articles/2003/08/24/1061663676588.html Confronted with this, does the REI back down and admit that it got it all wrong? Hell no. It digs itself in deeper. On 23 July 2007, the REI produced possibly the most confused and misleading media release of the year, entitled "Negative Gearing Improves Housing Affordability". http://www.reiaustralia.com.au/media/releases.asp This amazing document concludes that if people are encouraged to invest in housing (even established homes) this will lead to lower rents and thus, more affordable housing. I'd have thought that if people have to pay more to buy investment properties - because of increased demand stimulated by negative gearing - then they'd be needing higher returns and thus charging higher rents. Silly me. The release doesn't touch on the affordability of owner occupied housing at all - presumably the challenge of showing how increased demand will lead to lower prices was too much - even for the experienced spin doctors at the REI. The whole issue of negative gearing and the REI's sorry role in it's defence is worthy of separate treatment, but to move on.. 3. Take the revenue generated by scrapping negative gearing (NG) on investment places, and return it to the people in the form of a tax break on owner occupied housing - only. Such a move could be restricted to houses in areas facing decline or to properties that met specific environmental requirements. In conjunction with scrapping NG for investment places, this'd make the changes to NG revenue neutral and avoid the accusation of a revenue grab by Government. 4. Support schemes that give people the option of trading their part-time labour for a deposit. Such schemes are sometimes referred to as 'sweat-equity' and have been pioneered by Tumbarumba Council in southern NSW. They allow cash poor people with some available time to get out of the rent trap using their own labour. Tumbarumba Council should be congratulated on implementing this progressive program and other local, state and federal government bodies should take a good look at it. http://www.tumbashire.nsw.gov.au/news/pages/1317.html Of these ideas, all but #3 would give the REI apoplexy. But surely - just for once - the national interest should be considered. The last 30 years have shown that pandering to corporate lobby groups does not lead to better or more affordable housing. It's time for a fresh approach. Cheers .