April 28, 2025 • 19 mins
Australian capital city house prices continue to rise, and hotly anticipated interest rate cuts later this year could add further fuel to the fire, leaving some buyers and renters struggling to keep roofs over their heads.
This week on the podcast, host Chris Bourke talks to Brendan Coates, the Housing and Economic Security Program Director at the Grattan Institute, about what Prime Minister Anthony Albanese and opposition leader Peter Dutton are promising to do about the affordability crisis if elected on May 3.
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Speaker 1 (00:01):
We've got a comprehensive plan of home to Australia, whether
it is social housing, private rentals, for our build to
Rent scheme, whether it's our help to Buy a scheme,
or this latest announcement will help as well.
Speaker 2 (00:15):
Is a single person living in one of these houses
from this program we've built a couple of as a
single person actually moved into one of these, We've built
a couple of thousand houses. There's twenty eight thousand more.
You have a lifeline right now, and there'll be fewer
because you want to cup the Housing Australia Future Fund,
So that really is fewer homes, not a single person
who's living in one of these houses.
Speaker 3 (00:34):
Australia's housing crisis has been firing up the campaign trail
ahead of Saturday's federal election, But in the real world,
is any party actually capable of offering a solution to
a crisis that is increasingly looking unsolvable. Hello, I'm Chris
Burke and welcome to the last of our Bloomberg Australia
podcast election specials. With just a few days to go
(00:57):
before Australians head to the polls and munch on their
democracy sausages, we are returning to our favorite barbecue stopper,
you guessed at housing. Today we'll look at what the
major parties are pledging on housing policy and more importantly,
if any of it will actually work to do that.
I'm joined by Brendan Coates, who is the Housing and
(01:17):
Economic Security program Director at the Grashen Institute, heron Melbourne.
Brendan formerly worked as an economist at the World Bank.
He's also worked at the Australian Treasury and we are
lucky to have them with us today. Brendan, Welcome to
the podcast.
Speaker 4 (01:32):
Hi Chris, it's good to be with you.
Speaker 3 (01:34):
So Brendan. Before we take a look at what the
main parties are saying on housing, I think it's worth
reminding our listairs just how we got here. What's your take,
Why is Australia in a housing crisis and who or
what is to blame?
Speaker 4 (01:48):
Thanks Chris. Look, this is a crisis that's been building
for a long time. So housing has become more expensive
over recent decades, and then they've got a lot worse
during the pandemic. So that longer term story is one
where house prices have risen from three to four times
average incomes at the turn of the century to seven
to eight times averaging comes across most cities and ten
(02:08):
times average incomes in Sydney. That's the cost of the
average home visa viv average income for someone in Sydney.
The underlying cause of this is that we haven't built
enough housing to meet the needs of a growing population.
So Australia is one of only four OCD countries where
the number of homes built per person or the number
homes per person has gone backwards over the last two decades,
(02:31):
and we actually don't have that much housing despite the
fact that you know, we're an enormous land mass because
most people live in our five major cities. And then
since the pandemic, house prices but also particularly rents have
gone through the roof, So both house prices and rents
are up, you know, fifty percent plus across Brisbane, Adelaide
and Perth. Increases in Melbourne Sydney have been a bit
(02:53):
lower for both house prices and rents, but they've still
grown pretty strongly and that has meant that we've gone
from a world where people are worried about can I
afford to buy home? To increasingly people worry can I
afford to keep a roof over my head.
Speaker 3 (03:06):
Yeah, and it's just so complex and never ending. Because
house prices climbed to a fresh high in March, we
seem to be having that kind of headline so regularly now,
which I guess was helped obviously by the RBA's first
rate cut in quite a few years. We know that
(03:26):
more there are more rate cuts on the way too,
so we are desperately looking for solutions, and I wonder
if either of the main parties have this. Let's start
with the two main parties. How is Prime Minister Anthony
Albanezi trying to temp hotus on housing policy and how
does that compare with what Peter Duttin and the Coalition
(03:48):
are offering up.
Speaker 4 (03:50):
So both the government and the Opposition that their campaign
launches made housing the centerpiece of those launches, and the
pitch is really about trying to help first home buyers
to be out to buy their first home. Labour's main
policy has been extending what's called the First Home Guarantee Scheme,
which basically allows people to buy a home with only
a five percent deposit, with the federal government guaranteeing fifteen
(04:12):
percent of the loan amounts, so that the bank can
just treat them as a normal borrower who's got a
twenty percent deposit. There have been caps in place on
that scheme that have now been removed, so there's now
going to be no income caps if Labor is reelected
for that scheme, which basically means everyone will be able
to buy with five percent deposit, subject to a house
price cap of one point five million dollars in Sydney
(04:33):
and slightly lower caps in the other major capitals and regions.
By contrast, the Coalition is pitching for making mortgage for
payments tax deductible for first home buyers for the first
five years, provided that you buy a new home. That
would allow people to basically deduct the interest payments for
the first six hundred and fifty thousand dollars of their
(04:54):
mortgage against their taxable income, reducing their tax bills. Both
these policies, though, are really about putting more money in
first home buyers pockets, and they back up previous policies
from both sides. Super for Housing from the Coalition allowing
people to borrow to take out fifty thousand dollars from
their super to put it towards a house deposit, and
Labour has a shared equity scheme where they would pay
(05:15):
or co purchase a home thirty percent of the purchase
price for an existing home forty percent of a new
home to help get first home buyers on lowering comes
into the market. These are all pictures aimed at trying
to put more money in the pockets of first home
buyers to ultimately raise the rate of home ownership.
Speaker 3 (05:31):
A lot of the columnists don't love these policies. From
what I've been hearing and reading, what do you reckon?
Will any of these policies work?
Speaker 4 (05:41):
I think they all will raise house prices, which is
obviously counterproductive. The Coalition policies will probably raise house prices
by more, particularly because they're also going to relax the
serviceability buffer, so the amount that the level of interest
repayments or mortgage repayments at which you're assessed on your
ability to repay them loan, so the banks will be
able to lend you more money in that world where
(06:02):
that serviceability buffer is relaxed. Those both policies will probably
boost home ownership a little because those policies tend to
do that. But Labour's policy is more targeted at those
that are otherwise unlikely to buy their own home, and
both policies aren't really doing much on the supply side
to really get more housing builts. But there are other
things both the Coalition and Labor have announced in this
(06:25):
election campaign that are focused upon that.
Speaker 3 (06:28):
Yeah, let's talk about supply, because, as you say, these
policies are very much seem to address the demand side.
I mean, how would these policies help help supply and
is there anything else actually going on behind the scenes
perhaps that that is helping with supply.
Speaker 4 (06:46):
So the Coalition is saying that they're making mortgage pre
payments tax deductible for first time buyers would boot supply
because it's only available if you are buying a new
home at the margins. That is probably true, although I'd
be careful about estimating just how much that effect would be.
But in the background, this is also an election. Despite
these policies being focused on first term buyers pushing up demand,
(07:06):
drawing the ire of most economists, there are other things
going on in the background that would boost housing supply.
So Labor had put forward a plan to invest ten
billion dollars working with state government developers to get one
hundred thousand homes built over the next eight years, basically
partnering with those developers who have the advantage unlike private
developers and not having to pre sell the apartments they're
(07:28):
going to build before they can strike ground on the construction.
The Coalition has a plan to put five billion dollars
on the table for local councils to help pay for
that last smile infrastructure, roads, sewerage, water, telecommunications that often,
at least antecdotally appear to be a constraint on new
housing supply because local councils who actually are responsible for
(07:50):
delivering that infrastructure, particularly in growth areas, don't have a
tax base for existing residents to pay for that infrastructure,
and this money would help them to do that. And
then sitting behind all of this labor has over the
term of this Parliament put together a plan for one
point two million homes agreed by National Cabinet, so the
Commworth and all the state governments, and they're putting three
(08:10):
point five billion dollars of incentive payments on the table
to basically push the states fifteen thousand dollars per home
that they build above a baseline to basically encourage them
to pull the leavers that ultimately the states have, which
is where the big issues are to get more housing
built in Australia.
Speaker 3 (08:26):
So that's interesting. I mean, as you say, the federal
election is featuring this big kind of debate about housing,
but actually a lot of this work is going on
amongst the states themselves.
Speaker 4 (08:39):
That's right. So the federal government feels accountable and is
held accountable for housing affordability, but it's actually the states
in Australia's constitution that hold the main leavers. The two
big ones are the land neuge planning rules, so what
determines which determine what can be built where so you know,
can you build an avatar next to a school? Can
you build an eight story apartment building next to a
school as well? And the second one is construction regulations
(09:03):
that determine the cost of construction building regulations. Now, the
states are the main they hold the can on both
of these policy leavers, and so it's what the states
do that actually matters most. All the Feds are really
doing is using the power that they have, which is
the Federal Gumment checkbook, to reach across that common state
divide and try to influence what the states do and
in fact the biggest story, hidden story of this election
(09:26):
campaign is that the states are actually moving on this.
So both Victoria and New South Wales, obviously our two
biggest states, have recently reform land news planning rules to
allow a lot more housing to be built, particularly in Victoria,
up zoning around say sixty activity centers and transport corridors
in Victoria in Melbourne and just under fifty similar areas
in Sydney. And then they're also doing a series of
(09:50):
policies that basically make it easy to build townhouses right
across the inner emittering suburbs of our major cities. And
this has the potential to really unlock a lot of
additional supply, hundreds of thousands of extra homes. And we
see this exept for example, in what happened in Auckland
where Auckland and twenty sixteen up zoned three quarters of
its land area. Five years later, you know they've built
the equivalent of four percent of extra of the housing stock.
(10:12):
Rents are down twenty percent compared to where the otherwise
would be, and housing has become substantially more affordable. What
we're seeing in Victoria, New South Wales. If the state
governments can hold the line against community opposition from some
sections of the community the reforms are actually quite popular overall,
then we could actually be on our way to solving
Australia's housing crisis for the first time in frankly decades.
Speaker 3 (10:34):
Wow, that's more positive that I've that I've been hearing lately.
The zoning stuff is interesting because no matter what we
might think, we think we live in these very crowded cities,
but Sydney and Melbourne, from what I understand, are substantially
less dense than some of the big the major capitals
of the world.
Speaker 4 (10:53):
Yeah, Australian cities Melbourne, Sydney, you know, populations above five
million are some of the least dense cities of their
size in the world. And it really comes down to
the fact that if say in Melbourne, in the land
within ten kilometers of the city center, basically half of
it is zoned for neighborhood residential, the most restrictive zone
in Sydney, the most restrictive zone in R two. And
you look at a map of Sydney and you see
that plus heritage restrictions account for a lot of the
(11:14):
land that could otherwise be built upon and the result
is that people are pushed further out. They're pushed out
into greenfield areas, or they have to stay living with
their parents or in sharehouses because the housing that they
would like to have hasn't been built. And what we
see in our research, Chris, is if you ask people,
you know, are you willing to trade off to willing
to live in an apartment or a townhouse if for
(11:35):
a reasonable price, if it puts you close to the
city center, A lot of residents of Melbourne and Sydney
say yes. Whereas that housing doesn't get built at the
scale that it needs to be built right now, and
so ultimately, you know, housing is less affordable and our
economy actually functions more poorly because people are further from
the jobs that otherwise could exist in the city.
Speaker 3 (11:55):
Okay, when we come back, everyone's talking about first home buyers,
but what about the renders. Welcome back to the Bloomberg
Australia Podcast. You're here with me Chris Burke, and I'm
talking to Brendan Coates, one of the grat And Institute's
resident experts on all things housing. Brendan, we've spoken about
(12:18):
what the two main parties are pledging on housing and
how both of their policies are maybe only going to
touch the sides when it comes to the housing supply
and demand problem. But look, we do have to talk
about the Greens as well. They've been among the most
vocal about housing issues over the past couple of years
and have really been a thorn and Albanesi's side at times.
(12:39):
What's their big idea to persuade voters on Saturday.
Speaker 4 (12:43):
So the Greens have been incredibly vocal in this term
of parliament and have been pushing have picked up housing
as one of their big issues that they're wanting to
run on. And so the big policies they put forward
are to reform housing tax breaks that go to investors,
so lowering the capital gains tax discount currently fifty percent
that reduces the amount of tax that investors pay on
not just property but all investments if they hold them
(13:04):
for more than twelve months. And scrapping negative gearing, which
is basically the ability to offset the losses from an
investment property, say the interest costs, the maintenance the council
rates against your wage and salary income, so basically reducing
your tax bills. They also have a big plan to
basically have a public developer build something like six hundred
thousand homes over the next decade and make them available
(13:27):
in part to first home buyers. It's modeled on the
Singapore's Housing Development Board program, which where the Singapore and
government builds a lot of housing that makes available first
home buyers. And they're also pushing for a national rent
freeze for two years, so basically capping rents for two years,
and then after that having a National Renter's Protection Authority
(13:47):
which would have the power to basically investigate breaches of
tendency law. Noting of course that these are issues that
really sit with the states. It's the states that are
responsible for rental tendency law and so those powers would
have to be deferred to the com Wealth if it
was to regulate this.
Speaker 3 (14:05):
Yeah, they seem to be targeting both first home buyers
and renters with those policies, but you know, approximately a
third of Australians are renters, right, the main parties don't
seem to be offering a huge amount for them. But
of course I may be missing a trick there. What
are they offering if you're one of these renters?
Speaker 4 (14:26):
So there aren't big offerings from either major party. Particularly,
there's very little from the Coalition. The Coalition seems to
have decided that first home buyers are at target market
and it's not offering a great deal for renters. Labor
has put in place a tax breaks for bill to
rent development, so over the course of this term of
parliament that would basically involve build to rent developers, which
(14:47):
is institutions rather than sort of mum and dad investors
that account for most of the residential housing stock, you know,
are basically trying to get more of those build to
rent developments up and running that would offer more secure tendencies,
longer term leases to renters. Labor has raised the rate
of commwalth rent as systems, which is the payment that
goes to low income renters in who will receive another
(15:07):
incomes poor payment, by twenty seven percent in real terms
over the course of the last couple of budgets. So
Labor has done quite a bit for renters. The challenge
is that those reforms or those policy leaders that matter
for renters are particularly tendency laws. They are really state issues,
so there's limits on what the federal government can in
(15:27):
fact do to shift the dial on renters riots in Australia.
Speaker 3 (15:32):
So you guys at grad and spend hours pouring over research,
writing research and talking to governments, forming policy recommendations, etc.
What do you think the answer is to the housing
crisis in sixty seconds or less?
Speaker 4 (15:49):
I think the short answer is crease is building more homes.
So it's pushing the states to get more housing built
because that's ultimately what will make housing more affordable. Housing
is expensive because it's scarce. It will be cheaper if
it's abundant. Beyond that, it's then helping support vulnerable renters
who would otherwise struggle to pay you to keep everyth
over their head. That involves raising rent a systems by
another forty percent for couples and fifty percent for singles,
(16:12):
and adding to the Housing Australia Future Fund, which is
a Labor government policy that's about building thirty thousand social
affordable homes. We would like to see that doubled from tripled, sorry,
from ten to thirty billion dollars. And those policies together,
more homes and more support for vulnerale renters is our
best shot at solving the housing crisis in Australia.
Speaker 3 (16:31):
Easy look, as I alluded to before. We have more
rate cuts probably coming down the line, which will likely
stimulate a demand for housing, which means prices may continue
going up. Who knows what's at stake here, Let's look
at the bigger picture. What happens to prices and even
(16:53):
society as a whole if we don't do anything substantial
to help give everyone a fair chance to own their
own home.
Speaker 4 (17:00):
So I think there's just an enormous amount of stake here,
and I think that's why housing has become if the
probably number one, if not number one or two issue
the election campaign, because so many things are downstream of housing.
If you can't find secure and affordable housing, you know,
then it's harder to start your careers. You're less likely
creative business and being an entrepreneur. And we do worry
that the high rates of mortgage seat amongst younger Australians
(17:22):
are having that effect. If we don't allow more people
to live closer to where they want to, which is
close to the centers of our major cities. You know,
our cities are giant labor markets. If we don't, if
we imped where people can live, you basically make matching
in the labor market worse means you get lower rates
of productivity growth, you get less investment, and Australians end
up being poorer. And then we should worry about this
(17:43):
because it is contributing to rising inequality. You know, wealth
inequality in Australia has gotten a bit worse in the
last decade, but it's largely because of housing, because of
the growing gap between the housing haves and the have nots.
At the moment, that's partly an intergenerational story. So older
generations own a lot of housing, younger generation struggling to
get in. But over the course the next three decades
(18:03):
those houses are going to be inherited from the boomers
by younger generations and it will become a big introd
generational inequality problem. Your endeavors in life will depend much
more on who your parents are rather than what you
do with your own life. And that's not a society
that we want to see.
Speaker 3 (18:19):
Wow, No, most certainly not. So Yep, a lot of
work to do. I guess voters can take some heart
from while they may not be seeing a huge amount
to excite them at the federal election, that there is
certain new stuff going on behind the scenes in the
states something positive to take away. Thanks Brendan, and thank
(18:41):
you for listening to the Bloomberg Australia podcast. I'm Chris Burke.
This episode was recorded on the traditional lands of the
Wreundurie people of the Cooler Nation. It was produced by
Paul Allen and edited by Ainsley Chandler, Rebecca Jones and
Ainsley Thompson. Don't forget to follow and review the show
wherever you get your podcast, and sign up to Bloomberg's
(19:02):
free daily newsletter, Australia Briefing. Go to Bloomberg dot com
to subscribe.
We've got a comprehensive plan of home to Australia, whether
it is social housing, private rentals, for our build to
Rent scheme, whether it's our help to Buy a scheme,
or this latest announcement will help as well.
Speaker 2 (00:15):
Is a single person living in one of these houses
from this program we've built a couple of as a
single person actually moved into one of these, We've built
a couple of thousand houses. There's twenty eight thousand more.
You have a lifeline right now, and there'll be fewer
because you want to cup the Housing Australia Future Fund,
So that really is fewer homes, not a single person
who's living in one of these houses.
Speaker 3 (00:34):
Australia's housing crisis has been firing up the campaign trail
ahead of Saturday's federal election, But in the real world,
is any party actually capable of offering a solution to
a crisis that is increasingly looking unsolvable. Hello, I'm Chris
Burke and welcome to the last of our Bloomberg Australia
podcast election specials. With just a few days to go
(00:57):
before Australians head to the polls and munch on their
democracy sausages, we are returning to our favorite barbecue stopper,
you guessed at housing. Today we'll look at what the
major parties are pledging on housing policy and more importantly,
if any of it will actually work to do that.
I'm joined by Brendan Coates, who is the Housing and
(01:17):
Economic Security program Director at the Grashen Institute, heron Melbourne.
Brendan formerly worked as an economist at the World Bank.
He's also worked at the Australian Treasury and we are
lucky to have them with us today. Brendan, Welcome to
the podcast.
Speaker 4 (01:32):
Hi Chris, it's good to be with you.
Speaker 3 (01:34):
So Brendan. Before we take a look at what the
main parties are saying on housing, I think it's worth
reminding our listairs just how we got here. What's your take,
Why is Australia in a housing crisis and who or
what is to blame?
Speaker 4 (01:48):
Thanks Chris. Look, this is a crisis that's been building
for a long time. So housing has become more expensive
over recent decades, and then they've got a lot worse
during the pandemic. So that longer term story is one
where house prices have risen from three to four times
average incomes at the turn of the century to seven
to eight times averaging comes across most cities and ten
(02:08):
times average incomes in Sydney. That's the cost of the
average home visa viv average income for someone in Sydney.
The underlying cause of this is that we haven't built
enough housing to meet the needs of a growing population.
So Australia is one of only four OCD countries where
the number of homes built per person or the number
homes per person has gone backwards over the last two decades,
(02:31):
and we actually don't have that much housing despite the
fact that you know, we're an enormous land mass because
most people live in our five major cities. And then
since the pandemic, house prices but also particularly rents have
gone through the roof, So both house prices and rents
are up, you know, fifty percent plus across Brisbane, Adelaide
and Perth. Increases in Melbourne Sydney have been a bit
(02:53):
lower for both house prices and rents, but they've still
grown pretty strongly and that has meant that we've gone
from a world where people are worried about can I
afford to buy home? To increasingly people worry can I
afford to keep a roof over my head.
Speaker 3 (03:06):
Yeah, and it's just so complex and never ending. Because
house prices climbed to a fresh high in March, we
seem to be having that kind of headline so regularly now,
which I guess was helped obviously by the RBA's first
rate cut in quite a few years. We know that
(03:26):
more there are more rate cuts on the way too,
so we are desperately looking for solutions, and I wonder
if either of the main parties have this. Let's start
with the two main parties. How is Prime Minister Anthony
Albanezi trying to temp hotus on housing policy and how
does that compare with what Peter Duttin and the Coalition
(03:48):
are offering up.
Speaker 4 (03:50):
So both the government and the Opposition that their campaign
launches made housing the centerpiece of those launches, and the
pitch is really about trying to help first home buyers
to be out to buy their first home. Labour's main
policy has been extending what's called the First Home Guarantee Scheme,
which basically allows people to buy a home with only
a five percent deposit, with the federal government guaranteeing fifteen
(04:12):
percent of the loan amounts, so that the bank can
just treat them as a normal borrower who's got a
twenty percent deposit. There have been caps in place on
that scheme that have now been removed, so there's now
going to be no income caps if Labor is reelected
for that scheme, which basically means everyone will be able
to buy with five percent deposit, subject to a house
price cap of one point five million dollars in Sydney
(04:33):
and slightly lower caps in the other major capitals and regions.
By contrast, the Coalition is pitching for making mortgage for
payments tax deductible for first home buyers for the first
five years, provided that you buy a new home. That
would allow people to basically deduct the interest payments for
the first six hundred and fifty thousand dollars of their
(04:54):
mortgage against their taxable income, reducing their tax bills. Both
these policies, though, are really about putting more money in
first home buyers pockets, and they back up previous policies
from both sides. Super for Housing from the Coalition allowing
people to borrow to take out fifty thousand dollars from
their super to put it towards a house deposit, and
Labour has a shared equity scheme where they would pay
(05:15):
or co purchase a home thirty percent of the purchase
price for an existing home forty percent of a new
home to help get first home buyers on lowering comes
into the market. These are all pictures aimed at trying
to put more money in the pockets of first home
buyers to ultimately raise the rate of home ownership.
Speaker 3 (05:31):
A lot of the columnists don't love these policies. From
what I've been hearing and reading, what do you reckon?
Will any of these policies work?
Speaker 4 (05:41):
I think they all will raise house prices, which is
obviously counterproductive. The Coalition policies will probably raise house prices
by more, particularly because they're also going to relax the
serviceability buffer, so the amount that the level of interest
repayments or mortgage repayments at which you're assessed on your
ability to repay them loan, so the banks will be
able to lend you more money in that world where
(06:02):
that serviceability buffer is relaxed. Those both policies will probably
boost home ownership a little because those policies tend to
do that. But Labour's policy is more targeted at those
that are otherwise unlikely to buy their own home, and
both policies aren't really doing much on the supply side
to really get more housing builts. But there are other
things both the Coalition and Labor have announced in this
(06:25):
election campaign that are focused upon that.
Speaker 3 (06:28):
Yeah, let's talk about supply, because, as you say, these
policies are very much seem to address the demand side.
I mean, how would these policies help help supply and
is there anything else actually going on behind the scenes
perhaps that that is helping with supply.
Speaker 4 (06:46):
So the Coalition is saying that they're making mortgage pre
payments tax deductible for first time buyers would boot supply
because it's only available if you are buying a new
home at the margins. That is probably true, although I'd
be careful about estimating just how much that effect would be.
But in the background, this is also an election. Despite
these policies being focused on first term buyers pushing up demand,
(07:06):
drawing the ire of most economists, there are other things
going on in the background that would boost housing supply.
So Labor had put forward a plan to invest ten
billion dollars working with state government developers to get one
hundred thousand homes built over the next eight years, basically
partnering with those developers who have the advantage unlike private
developers and not having to pre sell the apartments they're
(07:28):
going to build before they can strike ground on the construction.
The Coalition has a plan to put five billion dollars
on the table for local councils to help pay for
that last smile infrastructure, roads, sewerage, water, telecommunications that often,
at least antecdotally appear to be a constraint on new
housing supply because local councils who actually are responsible for
(07:50):
delivering that infrastructure, particularly in growth areas, don't have a
tax base for existing residents to pay for that infrastructure,
and this money would help them to do that. And
then sitting behind all of this labor has over the
term of this Parliament put together a plan for one
point two million homes agreed by National Cabinet, so the
Commworth and all the state governments, and they're putting three
(08:10):
point five billion dollars of incentive payments on the table
to basically push the states fifteen thousand dollars per home
that they build above a baseline to basically encourage them
to pull the leavers that ultimately the states have, which
is where the big issues are to get more housing
built in Australia.
Speaker 3 (08:26):
So that's interesting. I mean, as you say, the federal
election is featuring this big kind of debate about housing,
but actually a lot of this work is going on
amongst the states themselves.
Speaker 4 (08:39):
That's right. So the federal government feels accountable and is
held accountable for housing affordability, but it's actually the states
in Australia's constitution that hold the main leavers. The two
big ones are the land neuge planning rules, so what
determines which determine what can be built where so you know,
can you build an avatar next to a school? Can
you build an eight story apartment building next to a
school as well? And the second one is construction regulations
(09:03):
that determine the cost of construction building regulations. Now, the
states are the main they hold the can on both
of these policy leavers, and so it's what the states
do that actually matters most. All the Feds are really
doing is using the power that they have, which is
the Federal Gumment checkbook, to reach across that common state
divide and try to influence what the states do and
in fact the biggest story, hidden story of this election
(09:26):
campaign is that the states are actually moving on this.
So both Victoria and New South Wales, obviously our two
biggest states, have recently reform land news planning rules to
allow a lot more housing to be built, particularly in Victoria,
up zoning around say sixty activity centers and transport corridors
in Victoria in Melbourne and just under fifty similar areas
in Sydney. And then they're also doing a series of
(09:50):
policies that basically make it easy to build townhouses right
across the inner emittering suburbs of our major cities. And
this has the potential to really unlock a lot of
additional supply, hundreds of thousands of extra homes. And we
see this exept for example, in what happened in Auckland
where Auckland and twenty sixteen up zoned three quarters of
its land area. Five years later, you know they've built
the equivalent of four percent of extra of the housing stock.
(10:12):
Rents are down twenty percent compared to where the otherwise
would be, and housing has become substantially more affordable. What
we're seeing in Victoria, New South Wales. If the state
governments can hold the line against community opposition from some
sections of the community the reforms are actually quite popular overall,
then we could actually be on our way to solving
Australia's housing crisis for the first time in frankly decades.
Speaker 3 (10:34):
Wow, that's more positive that I've that I've been hearing lately.
The zoning stuff is interesting because no matter what we
might think, we think we live in these very crowded cities,
but Sydney and Melbourne, from what I understand, are substantially
less dense than some of the big the major capitals
of the world.
Speaker 4 (10:53):
Yeah, Australian cities Melbourne, Sydney, you know, populations above five
million are some of the least dense cities of their
size in the world. And it really comes down to
the fact that if say in Melbourne, in the land
within ten kilometers of the city center, basically half of
it is zoned for neighborhood residential, the most restrictive zone
in Sydney, the most restrictive zone in R two. And
you look at a map of Sydney and you see
that plus heritage restrictions account for a lot of the
(11:14):
land that could otherwise be built upon and the result
is that people are pushed further out. They're pushed out
into greenfield areas, or they have to stay living with
their parents or in sharehouses because the housing that they
would like to have hasn't been built. And what we
see in our research, Chris, is if you ask people,
you know, are you willing to trade off to willing
to live in an apartment or a townhouse if for
(11:35):
a reasonable price, if it puts you close to the
city center, A lot of residents of Melbourne and Sydney
say yes. Whereas that housing doesn't get built at the
scale that it needs to be built right now, and
so ultimately, you know, housing is less affordable and our
economy actually functions more poorly because people are further from
the jobs that otherwise could exist in the city.
Speaker 3 (11:55):
Okay, when we come back, everyone's talking about first home buyers,
but what about the renders. Welcome back to the Bloomberg
Australia Podcast. You're here with me Chris Burke, and I'm
talking to Brendan Coates, one of the grat And Institute's
resident experts on all things housing. Brendan, we've spoken about
(12:18):
what the two main parties are pledging on housing and
how both of their policies are maybe only going to
touch the sides when it comes to the housing supply
and demand problem. But look, we do have to talk
about the Greens as well. They've been among the most
vocal about housing issues over the past couple of years
and have really been a thorn and Albanesi's side at times.
(12:39):
What's their big idea to persuade voters on Saturday.
Speaker 4 (12:43):
So the Greens have been incredibly vocal in this term
of parliament and have been pushing have picked up housing
as one of their big issues that they're wanting to
run on. And so the big policies they put forward
are to reform housing tax breaks that go to investors,
so lowering the capital gains tax discount currently fifty percent
that reduces the amount of tax that investors pay on
not just property but all investments if they hold them
(13:04):
for more than twelve months. And scrapping negative gearing, which
is basically the ability to offset the losses from an
investment property, say the interest costs, the maintenance the council
rates against your wage and salary income, so basically reducing
your tax bills. They also have a big plan to
basically have a public developer build something like six hundred
thousand homes over the next decade and make them available
(13:27):
in part to first home buyers. It's modeled on the
Singapore's Housing Development Board program, which where the Singapore and
government builds a lot of housing that makes available first
home buyers. And they're also pushing for a national rent
freeze for two years, so basically capping rents for two years,
and then after that having a National Renter's Protection Authority
(13:47):
which would have the power to basically investigate breaches of
tendency law. Noting of course that these are issues that
really sit with the states. It's the states that are
responsible for rental tendency law and so those powers would
have to be deferred to the com Wealth if it
was to regulate this.
Speaker 3 (14:05):
Yeah, they seem to be targeting both first home buyers
and renters with those policies, but you know, approximately a
third of Australians are renters, right, the main parties don't
seem to be offering a huge amount for them. But
of course I may be missing a trick there. What
are they offering if you're one of these renters?
Speaker 4 (14:26):
So there aren't big offerings from either major party. Particularly,
there's very little from the Coalition. The Coalition seems to
have decided that first home buyers are at target market
and it's not offering a great deal for renters. Labor
has put in place a tax breaks for bill to
rent development, so over the course of this term of
parliament that would basically involve build to rent developers, which
(14:47):
is institutions rather than sort of mum and dad investors
that account for most of the residential housing stock, you know,
are basically trying to get more of those build to
rent developments up and running that would offer more secure tendencies,
longer term leases to renters. Labor has raised the rate
of commwalth rent as systems, which is the payment that
goes to low income renters in who will receive another
(15:07):
incomes poor payment, by twenty seven percent in real terms
over the course of the last couple of budgets. So
Labor has done quite a bit for renters. The challenge
is that those reforms or those policy leaders that matter
for renters are particularly tendency laws. They are really state issues,
so there's limits on what the federal government can in
(15:27):
fact do to shift the dial on renters riots in Australia.
Speaker 3 (15:32):
So you guys at grad and spend hours pouring over research,
writing research and talking to governments, forming policy recommendations, etc.
What do you think the answer is to the housing
crisis in sixty seconds or less?
Speaker 4 (15:49):
I think the short answer is crease is building more homes.
So it's pushing the states to get more housing built
because that's ultimately what will make housing more affordable. Housing
is expensive because it's scarce. It will be cheaper if
it's abundant. Beyond that, it's then helping support vulnerable renters
who would otherwise struggle to pay you to keep everyth
over their head. That involves raising rent a systems by
another forty percent for couples and fifty percent for singles,
(16:12):
and adding to the Housing Australia Future Fund, which is
a Labor government policy that's about building thirty thousand social
affordable homes. We would like to see that doubled from tripled, sorry,
from ten to thirty billion dollars. And those policies together,
more homes and more support for vulnerale renters is our
best shot at solving the housing crisis in Australia.
Speaker 3 (16:31):
Easy look, as I alluded to before. We have more
rate cuts probably coming down the line, which will likely
stimulate a demand for housing, which means prices may continue
going up. Who knows what's at stake here, Let's look
at the bigger picture. What happens to prices and even
(16:53):
society as a whole if we don't do anything substantial
to help give everyone a fair chance to own their
own home.
Speaker 4 (17:00):
So I think there's just an enormous amount of stake here,
and I think that's why housing has become if the
probably number one, if not number one or two issue
the election campaign, because so many things are downstream of housing.
If you can't find secure and affordable housing, you know,
then it's harder to start your careers. You're less likely
creative business and being an entrepreneur. And we do worry
that the high rates of mortgage seat amongst younger Australians
(17:22):
are having that effect. If we don't allow more people
to live closer to where they want to, which is
close to the centers of our major cities. You know,
our cities are giant labor markets. If we don't, if
we imped where people can live, you basically make matching
in the labor market worse means you get lower rates
of productivity growth, you get less investment, and Australians end
up being poorer. And then we should worry about this
(17:43):
because it is contributing to rising inequality. You know, wealth
inequality in Australia has gotten a bit worse in the
last decade, but it's largely because of housing, because of
the growing gap between the housing haves and the have nots.
At the moment, that's partly an intergenerational story. So older
generations own a lot of housing, younger generation struggling to
get in. But over the course the next three decades
(18:03):
those houses are going to be inherited from the boomers
by younger generations and it will become a big introd
generational inequality problem. Your endeavors in life will depend much
more on who your parents are rather than what you
do with your own life. And that's not a society
that we want to see.
Speaker 3 (18:19):
Wow, No, most certainly not. So Yep, a lot of
work to do. I guess voters can take some heart
from while they may not be seeing a huge amount
to excite them at the federal election, that there is
certain new stuff going on behind the scenes in the
states something positive to take away. Thanks Brendan, and thank
(18:41):
you for listening to the Bloomberg Australia podcast. I'm Chris Burke.
This episode was recorded on the traditional lands of the
Wreundurie people of the Cooler Nation. It was produced by
Paul Allen and edited by Ainsley Chandler, Rebecca Jones and
Ainsley Thompson. Don't forget to follow and review the show
wherever you get your podcast, and sign up to Bloomberg's
(19:02):
free daily newsletter, Australia Briefing. Go to Bloomberg dot com
to subscribe.
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