3 solutions for affordability - By Grant Harrod, LJ Hooker CEO
The rate of capital city property growth has outpaced household incomes for the majority of Australians, creating significant affordability challenges.
So which issues could potentially improve affordability?
A recent LJ Hooker survey of more than 2,600 property owners found stamp duty was a major factor in the decision-making process for those looking to sell and buy.
The survey found 51 per cent of home owners that received a property appraisal by a real estate agent but did not list their property for sale would, in fact, do so if stamp duty was lower. This figure rose to 61 per cent if stamp duty was abolished entirely.
These numbers highlight the chokehold the current stamp duty tax has on the secondary market; Australians families would like to sell, move and relocate but cannot afford the cost of transacting. According to our data, the reduction or removal of stamp duty will see more properties come onto the market, which in turn will help balance the current supply and demand issue.
State and federal governments should work together to look at a number of solutions which could elevate housing stress, so our children’s children will be able to afford property in all the major cities across Australia.
Here at LJ Hooker, we think these changes to the below three policy areas would help political decision makers around Australia solve housing affordability issues:
1. Affordable housing
Recent strong price growth across our capital cities has seen low-income and essential service workers such as teachers, nurses and emergency service workers priced out of most inner city markets. However, at present, it has not been feasible for developers to provide affordable solutions. The government, therefore, needs to step in with incentives to
ensure the delivery of affordable housing can occur.
2. Removal of stamp duty
The high cost of selling, buying and moving home has reached a point where people are reconsidering and/or delaying their next property move. The scrapping of stamp duty would directly assist housing affordability by helping increase the mobility of the population and encourage owner-occupiers to upsize and downgrade into a property that suits their changing needs without being slogged with an exorbitant tax. This will insure more properties become available for sale, helping balance supply with demand and insuring more families get to grow up in their home of choice.
3. Regionalisation and decentralisation of government services and businesses
The growing population across all capital cities and the increasing cost of providing infrastructure to the masses means that decentralisation of businesses, households and government departments is becoming essential.
This regionalisation will boost the economies of these smaller regions and provide employees access to more affordable housing in these areas. It will also alleviate some stress and demand on infrastructure, services and housing in capital cities.