AUSTRALIANS ARE NOW LIVING WITH SOME OF THE MOST UNAFFORDABLE HOUSING IN THE WORLD!

BUT IT DOESN'T HAVE TO BE THIS WAY!

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So what happened to make Australia have some of the least affordable housing on the planet?

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OBSCENE TAX INCENTIVES TO INVEST IN PROPERTY

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Negative gearing and the capital gains tax discount on real estate have turned housing from a fundamental human need in Australia into a giant tax minimisation scheme for wealthy Australians.

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Negative gearing by property investors reduced personal income tax revenue collection in Australia by $13.2 billion in the year 2010/2011, while the capital gains tax discount on real estate sales reduced the taxes collected by the Government from property investors by billions more.

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These tax perks act as an incentive for property investors to out bid home buyers at auction because you can't negatively gear your own home.
 

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LAWMAKERS PROFIT FROM THE STATUS QUO

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Australia's 226 federal politicians are nearly all heavily invested in real estate. Many are also using their accommodation allowance of $273 a night (more than someone on Centrelink is supposed to survive on in a whole week) to pay off the mortgage on a spouse's Canberra investment property.

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As of April 2017 government MPs and senators owned 289 properties between them. The average Coalition politician owned 2.7 properties and the Nationals in the Federal Parliament are some of the worst offenders in this regard. Meanwhile only half the average Australian now owns their own home.

 

Put simply, the vast majority of our politicians have a vested interest in keeping this tax minimisation scheme in place to keep the price of housing high because they stand to benefit personally from the current arrangements.

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AUSTRALIAN HOUSING IS A HAVEN FOR MONEY LAUNDERING

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For over a decade our federal politicians have failed to subject real estate agents, lawyers, accountants and other professionals with roles in the property sector to the Anti-Money Laundering and Counter Terrorism Financing Act 2006 because of push back from industry leaders despite our international partners urging us to close the loopholes.

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As a result, Australia remains an attractive place for international crime groups to "wash" their dirty money in our real estate market. This sort of shady economic activity also contributes to the high price of housing in Australia.

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WE OPENED UP OUR HOUSING MARKET TO INVESTORS ALL OVER THE WORLD

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Another factor driving up house prices is Australia's weak enforcement of its laws governing overseas investors buying property in Australia. Even just temporary residents are allowed to buy property in Australia and there is little checking that they sell their properties when they leave.

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There is also no requirement for real estate agents to check that purchasers are legally entitled to buy in Australia and only a fraction of these illegal sales are discovered by the Foreign Investment Review Board.

 

At the same time, large numbers of non-resident overseas investors have chosen Australian real estate as a safe place to park their money. Many of these buyers do not want the trouble of managing a rental property remotely and do not get tenants in so the property will be in pristine condition when it is sold again.

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The 2016 Census suggests that there may be as many as 300,000 of these deliberately vacant investor owned properties across Australia - enough to house every homeless person in this country and every person on a public housing waiting list.

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If these properties were made available to renters there would be a significant drop in rents and house prices. But as things stand, these unavailable properties create an artificial scarcity of housing for renters and buyers which keeps housing expensive.

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THIS CAN'T GO ON FOREVER

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All of these factors have combined to form a perfect storm for housing affordability in Australia, but this is not sustainable in the long term. It is now estimated that property in Australia is probably overvalued by as much as 30 to 40 percent over its real worth.

 

However a controlled demolition of house prices in Australia by making property a less attractive investment option compared to other forms of more productive investment over time can prevent an economic disaster from occurring and better policies by government can make sure another bubble does not occur.

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CHECK OUT OUR POLICIES TO SEE OUR PLAN TO SOLVE THIS

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