Housing crisis: Political band aids doing more harm than good

While politicians are quick to talk about all the great ideas they have to help alleviate Australia’s housing crisis, they still don’t realise it is a problem of their own making.

Their suggested solutions more often than not show that they have no real understanding of how property investment works in Australia.

Imposing rent freezes and charging investors additional fees and levies will not help provide more rental properties; in fact it will significantly reduce the rental pool.

Every time a state or territory government passes legislation or announces a policy move or hands down a budget that impacts the rental shortage and housing affordability issue, they are making it worse – not better.

The biggest single cost in the budget of most households is accommodation, whether buying or renting, and it keeps getting worse because our politicians keep making decisions that make it more costly.

In recent weeks we’ve had the Federal Budget and state and territory budgets handed down and there’s not a single measure in any of them that deals with the high cost of building and buying houses, or with the chronic shortage of rental properties causing residential rents to rise and rise.

There are numerous measures though which, directly and indirectly, make those core housing issues worse.

No incentives for landlords

The reality is that no matter how much social housing all levels of Government promise to deliver, it is private landlords who will still carry the heaviest load in terms of providing Australia’s rental accommodation.

There has not been a single measure to provide encouragement or incentives to the people who provide more than 90 per cent of the homes people rent – private mum-and-dad investors.

While many budgets have policies to build more social housing over the next four or five years, there is nothing to address the immediate shortage of tenancies.

What there has been, notably in the state budgets from the governments of New South Wales and Victoria, and in other policies they have announced, is a series of measures that increase the costs on the people who provide the product that’s in short supply, particularly with new or increased taxes.

Victoria has exacerbated the problem by introducing new requirements on the standard on the dwellings that will force owners to spend between $5,000 and $10,000 on upgrades.

As a result, for many investors holding onto their properties is no longer financially viable so they are selling up, reducing the potential rental pool even further.

Building costs not addressed

According to Suburbtrends more than 3,000 property investors sold their Melbourne properties in May alone and, across Victoria, almost 4,000 rental properties are listed for sale.

And it’s not only Victoria. It’s also happening in New South Wales, with thousands of investor-owned properties currently listed for sale.

The state budget in NSW includes significant increases in land tax and a major Emergency Services Levy burden on property owners.

Queensland’s budget has introduced a renter relief package but there was nothing to increase the supply of rental properties and reduce the cost of building new homes.

The rental shortage has been created by years of politicians discouraging, demonising and disincentivising investors and they continue to make the situation worse for tenants with ongoing measures that punish investors and exacerbate the shortage.

The high cost of building new homes, whether they be houses or townhouses or apartments, has been largely, though not entirely, caused by imposts from various levels of government, including local councils, but in particular by state governments.