Grattan Institute Fellow Brendan Coates urges governments to make “tough decisions” on housing policy


Housing policy expert Brendan Coates, a fellow at the Grattan Institute, held a seminar for the Institute for the Study of Social Change today on options to address the housing affordability crisis in Australia. The presentation, titled Options to Address Housing Affordability: the Good, the Bad and the Ugly, was introduced by Institute for the Study of Social Change director Richard Eccleston.

Coates told the audience that simply moving to the country where house prices are cheaper, as recently suggested by Deputy Prime Minister Barnaby Joyce, was not a viable solution to the crisis, given that house price to income ratios have jumped in regions as well as cities.

Grattan Institute Fellow Brendan Coates (left) and Institute for the Study of Social Change director Richard Eccleston

Grattan Institute Fellow Brendan Coates (left) and Institute for the Study of Social Change director Richard Eccleston

He said in Tasmania, as elsewhere in Australia, a major contributor to the problem was the scarcity — and value — of land, which was driving up house prices.

He said in Melbourne and Sydney particularly most construction was in high-rises and fringe-area housing, whereas the more desirable housing (the housing more people wanted) was of the semi-detached variety, in middle suburban areas. He also argued governments (both state and Commonwealth) were not spending on transport infrastructure in the right areas.

Coates said home ownership among 35 to 44 year olds has dropped considerably since house price growth sped up in 2006. “If you don’t own a home by the time you’re 44 you probably won’t own one,” was his blunt assessment.

Recommendations for change:

Coates said the Commonwealth could impact on the demand problem by making changes to negative gearing and capital gains tax policy. He said including the home in pension asset tests would also make a positive difference as would changes to foreign investment rules.

On the supply side, Coates said state governments should boost density in middle suburbs and along transport corridors and scrap first home buyers grants, which he said — while electorally popular — were proven to be useless in improving housing affordability.

The presentation was held as part of the weekly Friday Seminar Series hosted by the Institute for the Study of Social Change and the School of Social Sciences.

The recommendations will be detailed in an upcoming paper to be released by the Grattan Institute.

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