Structural issues, not tax, driving housing crisis

STRUCTURAL issues in construction productivity, labour capacity, planning systems and government-imposed costs rather than tax settings are behind Australia’s housing unaffordability issues, according to Property Investment Professionals of Australia (PIPA).

Record levels of public infrastructure investment are absorbing the same skilled labour needed for residential construction, with ABS labour force data showing persistently high vacancy rates across construction trades.

PIPA chair Cate Bakos said this is a structural issue that governments at all levels must confront.

“Housing is competing with government-funded megaprojects for workers and materials.

“Until we co-ordinate pipelines, we’re effectively bidding against ourselves, and homebuyers will pay the price.”

She said state and federal governments must acknowledge their role in housing affordability.

“You can’t talk about housing costs without talking about the taxes and charges baked into every new home,” Bakos said.

“The government is not a bystander in the property price pressures. It’s a major cost participant.”

An important consideration, Bakos said, was the amount of tax applied to property already in the form of land tax, stamp duty and council rates.

“While some are state-based taxes, the reality is that property investors endure a disproportionate level of tax when contrasted against share market investors.”

The federal government has a target of 1.2 million homes to be built over five years, which will require about 240,000 completions annually, which is a 25 per cent to 35 per cent uplift on the 170,000 to 190,000 average annual completions in recent years, according to ABS Building Activity data.

Mike Mortlock, manager of national firm MCG Quantity Surveyors, said the national debate had become distracted by investor-focused tax settings while ignoring the more important constraints that determine how many homes Australia can actually build.

“We keep hearing about negative gearing and Capital Gains Tax as if they’re the levers that will magically fix affordability.

“The real issue is that we simply cannot deliver homes at the speed and scale required.

“Productivity has flatlined, labour is stretched, approvals are slow and governments have embedded significant costs into every nJAMES TAYLOR

Structural issues in construction productivity, labour capacity, planning systems and government-imposed costs rather than tax settings are behind Australia’s housing unaffordability issues, according to Property Investment Professionals of Australia (PIPA).

Record levels of public infrastructure investment are absorbing the same skilled labour needed for residential construction, with ABS labour force data showing persistently high vacancy rates across construction trades.

PIPA chair Cate Bakos said this is a structural issue that governments at all levels must confront.

“Housing is competing with government-funded megaprojects for workers and materials.

“Until we co-ordinate pipelines, we’re effectively bidding against ourselves, and homebuyers will pay the price.”

She said state and federal governments must acknowledge their role in housing affordability.

“You can’t talk about housing costs without talking about the taxes and charges baked into every new home,” Bakos said.

“The government is not a bystander in the property price pressures. It’s a major cost participant.”

An important consideration, Bakos said, was the amount of tax applied to property already in the form of land tax, stamp duty and council rates.

“While some are state-based taxes, the reality is that property investors endure a disproportionate level of tax when contrasted against share market investors.”

The federal government has a target of 1.2 million homes to be built over five years, which will require about 240,000 completions annually, which is a 25 per cent to 35 per cent uplift on the 170,000 to 190,000 average annual completions in recent years, according to ABS Building Activity data.

Mike Mortlock, manager of national firm MCG Quantity Surveyors, said the national debate had become distracted by investor-focused tax settings while ignoring the more important constraints that determine how many homes Australia can actually build.

“We keep hearing about negative gearing and Capital Gains Tax as if they’re the levers that will magically fix affordability.

“The real issue is that we simply cannot deliver homes at the speed and scale required.

“Productivity has flatlined, labour is stretched, approvals are slow and governments have embedded significant costs into every new dwelling.”