ANALYSIS: Australia’s homeownership rate peaked at 73 per cent in 1966 but is about 63 per cent today. Here are some ways to fix a damaging crisis that has morphed into a political, economic and social problem.
exposing the lack of medium-density apartments and townhouses in the suburbs near city centres, delays and red tape caused by overzealous local governments, and push back from NIMBY agitators.A report by former RBA economist Tony Richards calculates that housing supply has expanded at just 4.5 per cent ahead of population growth over the 20 years to 2021, much slower than the 17 per cent above the population increase in the previous 20 years..
“Maybe that might change if they were to face an annual land tax and it was based on what the value of their land would be without zoning restrictions. Maybe they might throw up their hands and decide not to fight medium density quite so hard.” “We have to be careful that if we unlock super funds. If we do not create supply, all that does is put more upward pressure on prices,” he says.A less drastic option suggested by other policymakers is federal and state financial incentives to local councils to increase density.For example, communities that accept higher density could be compensated via discounts on their land tax and local government rates, cash incentives and/or investments in local infrastructure and services.
The federal government this year paid $2.9 billion in “untied” financial assistance grants to local governments to be spent how they like. Moreover, the Commonwealth has a $120 billion infrastructure pipeline across the states and territories. Centre for Independent Studies chief economist Peter Tulip says: “If you can get a council to rezone a block of land, it is worth millions and millions of dollars, which is obviously a huge incentive for corruption.“It’s like any black market. If you restrict the supply, the price will go up and lead to illegal activity and you typically get bribery.”
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