Australia struggles to solve housing crisis as politicians scrap
AUSTRALIA’S latest attempts to solve its housing crisis are stuck in political gridlock as the amount of available rental space in the nation hovers near a record low.
A key piece of the centre-left Labor government’s housing programme is in limbo after opposition parties on Wednesday (Sep 18) voted to defer for two months legislation that aims to help first homeowners break into the market. The bill is for a shared equity scheme which would allow citizens to buy houses with a smaller deposit.
A separate bill that would give tax incentives to developers to build rental housing could face the same fate on Thursday, after also drawing criticism from opposition parties. The changes are intended to attract institutional investors.
“The build to rent idea I think is a very bad idea,” Senator Andrew Bragg, who has spearheaded the centre-right opposition’s position on housing, said on Tuesday. “Australians do not want to live in a country where corporations are landlords, such as BlackRock, and so that’s why we are against these policies which corporatise the housing market and give up on home ownership.”
Home prices in Australia are rising even with interest rates at a 12-year high, reflecting demand that’s outstripping supply. On the other side, rental vacancies fell in August to just 1.39 per cent, close to the February low of 1.09 per cent, according to PropTrack.
The Labor government is caught in a political pincer movement as its policy proposals to help overcome the housing crisis come under concerted attack from both the centre-right Liberal-National opposition and the left-wing Greens Party.
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The Greens are calling for a cap on rents to help lower-income families deal with a national cost-of-living crisis, while the Liberal Nationals want deep cuts to migration following a post-Covid spike. Despite their ideological differences, the two parties teamed up on Wednesday to block the government’s bill.
Housing is shaping up as a significant issue at the next election which is due by May. The Liberal-National coalition is expected to double down on a policy it took to the last election that would see first-home buyers able to tap into their pension savings – known locally as superannuation – to buy a home.
Some funds in Australia’s A$3.9 trillion (S$3.4 trillion) pension system have begun rallying against this “Super for Housing” policy. A report released on Thursday, commissioned by industry body the Super Members Council, said the Liberal-National plan would only make housing even more expensive. The report was written by veteran independent economist Saul Eslake.
“History tells you unambiguously and unequivocally that the main effect of this will be to boost house prices,” Eslake said. “Super for housing will primarily help people who could have bought a house and would’ve bought a house anyway just to buy more expensive ones.”
A separate Australian housing programme, backed by some of the nation’s biggest pension funds, is showing early results. More than 13,000 homes had been approved to be built under the plan. BLOOMBERG
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