Housing is a key cost-of-living issue, and Labor has the slightly better offer

A roof over your head. Of all the essentials in life, it would sit close to the top. But despite Melbourne’s touted status as one of the most livable cities in the world, it is one of the most expensive places to buy or rent a home.

Days before Victorians go to the polls, a survey conducted by Resolve Strategic for The Age reveals voters want policies that provide more relief from cost-of-living pressures. This is sometimes boiled down to the cost of food, transport and energy, and all these are important. But buying a home is the most expensive purchase most people will make, and for renters, housing is the biggest weekly expense.

Matthew Guy tours a house under construction in Manor Lakes. He has promised $261 million to remove stamp duty for first-home buyers Credit: Jason South

Victorians have good reason to be concerned about the cost and availability of housing. In April last year, the median house price in Melbourne broke through the million-dollar mark for the first time, up from $805,000 in the June quarter of 2019. House prices have also soared in regional areas, as city dwellers sought a lockdown tree change and capitalised on the greater capacity to work from home.

It’s no better for those renting. Domain’s September rental report showed that Melbourne rents for units had surged an average of 15 per cent compared with last year, while house rents increased almost 10 per cent. An availability crisis in the regions has resulted in people living in caravan parks and tents.

While interest rate rises have reduced house prices, Melbourne’s are still 24 per cent higher than they were at the 2018 state election, while unit prices are up 9.7 per cent. Meanwhile, there are 64,168 households on the social housing waiting list.

So, what is on offer from the major parties? As part of our Victoria’s Agenda project, we have monitored how major parties plan to tackle housing affordability and build on the state’s supply of social and affordable housing.

Labor’s signature cost-of-living policy is the State Electricity Commission, which it claims will lower power costs. On housing, it has some runs on the board. In 2020, it committed to build 12,000 social and affordable dwellings as part of its $5.3 billion Big Housing Build. This will undoubtedly help those at the very bottom of the property pile. But it has made no promises to keep building beyond that program’s four-year horizon. Earlier this year, it abandoned its controversial $800 million social housing tax after Premier Daniel Andrews accused the property sector of reneging on a deal that would mean faster approval rules in return for developers paying a 1.75 per cent levy.

Labor has also announced an extension to its Victorian Homebuyer Fund, which allows buyers to purchase with a 5 per cent deposit, while the government gets a stake of up to 25 per cent in the home, to help low-income people get over the deposit and repayment hurdle.

Meanwhile, Labor has struggled to achieve results against its long-held policy intention of pushing greater development close to existing infrastructure. The Suburban Rail Loop is intended to help achieve this, but it’s a long way off.

The Liberals’ signature cost-of-living measure is the very popular $2 train fares. On housing, the party has promised $261 million to remove stamp duty for first-home buyers for one year on homes worth up to $1 million. (There is already no stamp duty for first home buyers on houses under $600,000.) This carries the danger of driving prices up. The party has also pledged to release 150,000 new housing lots on Melbourne’s fringe over two years. This might reduce home prices, but it would compound the problem of urban sprawl into places with few services.

Between property taxes, land-use planning and real estate regulation, state governments control substantial policy levers in this sphere. Neither side has been adventurous or imaginative in this area during the campaign. But Labor has a better record and the Liberals’ policies are likely to only compound the problem. On this issue of importance to Victorian voters, Andrews’ team has the edge.

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