Stamp duty ban can help solve housing crisis

Proposed moves such as a rental freeze and price caps won’t likely solve our rental and housing affordability crisis but a moratorium on stamp duty can.

OPINION

As the Albanese Government on Tuesday hands down its second federal budget, thousands of Australians will be watching with a legitimate expectation that steps will be taken to address Australia’s housing crisis.

This must be a budget of “nation building” if we are to ensure every Australian has access to the housing they need.

Demand in the residential property market is far outstripping supply. As a result, housing

affordability is worsening and rental prices are continuing to escalate, impacting many and contributing to inflation.

Unfortunately, the market is not responding to rising demand.

Due to increasing building costs and uncertainty following the collapse of high-profile builders, the opposite is occurring. Last year, new house and apartment builds fell 15.4 per cent and 34 per cent respectively. Further declines are expected. This needs to be turned around quickly.

More housing needs to be built to turn the housing market around.

The focus must be on the supply side, and two-fold: supporting new property builds while encouraging, rather than deterring, investment in rental properties.

Firstly, the Government needs to incentivise and facilitate greater supply of new homes.

We know a target has been set to build one million new homes over the five years to 2029, but to achieve this, investment is urgently needed to increase the building industry’s capacity to deliver these homes.

The investment required includes utilising skilled migration to build homes, encouraging more people to start and complete trade apprenticeships, and investment alongside state and local governments to develop the right planning framework and incentives. This is the first step and should be prioritised immediately.

Direct incentives are also needed.

Federally funding a national moratorium on stamp duty and government charges for new builds, combined with funding to guarantee project completion, would be most effective in the current environment.

Rent price hikes have been severe in most cities. Picture: NCA NewsWire / Jeremy Piper

Secondly, the Federal Government should avoid the temptation to intervene in the rental market. We’ve already seen the effect of regulators making it more expensive and less attractive to invest, and rental controls would further exacerbate these conditions.

The Federal Government must categorically rule out the introduction of rental freezes and caps.

Instead, the Government should be incentivising investment in rentals by levelling the playing field and removing the interest rate penalty on investors.

‘Mum and Dad’ investors have demonstrated their willingness to provide rental stock to the one in three Australians that rent. They provide 65 per cent of rental properties in the country. This potential should be harnessed rather than causing them to leave the market in droves.

Finally, the Commonwealth should not lose sight of the immense opportunity stamp duty reform provides to increase mobility and optimise the use of Australia’s housing stock.

REA Group chief executive Owen Wilson.

Support for the States to transition from stamp duty to a broadbased land tax must be seriously explored if we hope to create a strong structural foundation for an efficient and equitable property market.

The solutions to Australia’s housing crisis require leadership at all levels of government. Challenges present opportunities to think differently and create meaningful change. The Albanese government has the opportunity to do both in the budget this week.

Owen Wilson is the chief executive of REA Group, the owner of websites such as realestate.com.au, realcommercial.com.au and more.

Originally published as Stamp duty ban can help solve housing crisis