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The Forum > Article Comments > Sydney lurches to housing affordability disaster > Comments

Sydney lurches to housing affordability disaster : Comments

By John Muscat, published 6/12/2016

The wrangling isn’t over whether to reduce prices, but how. And that depends on where you fit in the city’s system of interests with a stake in property development and construction.

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At the end of the day, affordability is connected to supply! And supply constraints have a number of advocates with vested interest in confected supply rationing?

#1/ the state government, who gains income from stamp duties, which increase with alleged value, confected or not?

#2/ Negatively geared Landlords, whose taxpayer subsidised rent returns/tax minimization outcomes/consequent capital gains, are always higher if residential buyers are squeezed, preferentially from their narrow perspective forever!?

#3/ Urban developers whose apartment blocks are more salable due to land supply constraints?

#4/ Councils who can and do get higher rates/land tax, given higher valuations, even where created by seriously rationed supply

#5/ Myopically focused city planners, who want to place people along public transport corridors? And on spurious confected or patently untrue grounds like alleged superior health care outcomes? What the state and the nation need as as never before, is a leader and a team ready to bite the bullet call out the BS for what it is and do what is necessary to restore housing affordability and the economy that depends more than ever now on a healthy home construction industry! To that end five important things must be done?

#1/ The GST must be withheld from those states unwilling or unable to comply with the agreement to end stamp duties etc, that placed the GST in their hands!

#2/ Negative gearing must be redirected and apply only to new residential construction plus normal commercial investment!

#3/ Completely remove capital gains tax exclusions/subsidies from any and all residential housing, save newly built and sold within a year of urban land acquisition or rezoning!

#4/ Crack on with all means at hand, (rapid rail rollouts/the NBN) on decentralization!

#5/ Stop listening to the confected concerns (BS) of counterproductive vested interest!
Alan B.
Posted by Alan B., Tuesday, 6 December 2016 10:04:02 AM
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If the country returned to small scale farming enterprises and made good products, people would be happy to move out of the city and thus house prices would balance out. Its not like many people over 25 years of age actually prefer living in crowded cities with long commutes. At the moment, sadly, starting up a farm or rural business is difficult because you're often competing with massive corporations with limitless capital. Community focused family farms shouldn't have to pay tax.
Posted by progressive pat, Tuesday, 6 December 2016 12:23:29 PM
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“Past affordability eruptions were blown off course by the tax issue. Eventually, Labor embraced reform of negative gearing and CGT concessions as policy, urged on by think tanks like Grattan Institute and McKell Institute, prominent knowledge-welfare voices. Yet according to their own estimates, prices would fall by a measly 2 and 0.49 per cent respectively.

Considering that Sydney prices have escalated by a staggering 64 per cent since 2012, the focus on tax reform is a distraction. Economists like Judith Sloan and Stephen Koukoulas maintain that if there are any tax impacts at all, they are secondary to supply constraints rather than vice versa.”

One would have thought that the Baird government would be aware of the relative insignificance of the tax impact. However, this is not the case. About two weeks ago, NSW Planning Minister Rob Stokes came out with the startling revelation that negative gearing was largely responsible for the price escalation, and consequently the federal government must withdraw the “concession”.

Surprisingly (or hypocritically), Stokes did not acknowledge the significant NSW government influence on housing prices, e.g. it controls the district location and supply of building allotments; it makes billions from stamp duty on housing sales; and it could use better regional planning to ease Sydney’s population growth pressure.
Posted by Raycom, Tuesday, 6 December 2016 4:27:22 PM
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