The boss of the federal treasury has confirmed what many of us have known for a long time -- it's incredibly hard for average people to get into the Australian property market. And despite a big focus on housing affordability in this month's budget, it's not going to get any easier anytime soon.
John Fraser, the secretary to the treasury, fronted a Senate estimates hearing on Tuesday to talk economics. Greens senator Peter Whish-Wilson had a number of questions about housing and mortgages, and toward the end of his line of questioning the conversation turned to the government's housing affordability measures. Fraser gave some revealing and blunt answers:
Whish-Wilson: The budget was full of a number of headlines, reducing pressure on housing affordability... is the treasury's group of policies aimed at housing affordability primarily aimed at reducing pressure on house prices? And how long do you think that will take?
Fraser: It will take a long time.
Fraser went on to say many ordinary Australians faced an "incredibly uphill battle" to become homeowners or even just secure private rentals.
The budget featured a number of minor changes ostensibly to improve housing affordability. Treasurer Scott Morrison said in his budget speech that the government "prefer the scalpel to the chainsaw" when it comes to fiddling with the housing market -- at the time, we joked it was more like a blunt nailfile.
Housing affordability measures announced include:
- A deposit scheme for first homebuyers where income can be salary sacrificed into a superannuation account to generate interest at a higher rate than a normal bank account -- but only to the value of $30,000;
- Incentives for people with large homes to downsize into smaller homes;
- Very minor changes to slightly wind back negative gearing;
- Changes to clamp down on foreign ownership;
- And plans to boost supply of new homes.
The changes have been criticised for being too small to make any significant difference for most aspiring homeowners. Whish-Wilson asked Fraser what the aim of the policies were.
Whish-Wilson: So the primary aim isn't to bring down house prices? Would that be a correct assumption?
Fraser: Yeah probably.
Fraser went on to say that most of the housing measures were aimed at assisting people in dire need, by boosting public and social housing stock. Other measures in the budget include a "bond aggregator model" to help raise funds to finance and build housing for low-income people.
"It's to facilitate people in that cohort who would struggle for an intemperate time to get into the housing market," Fraser said.
"To have a policy objective of bringing down house prices, we've seen efforts in other countries which have run into sand, there's design issues. In Australia there's been a lot of thought put into it. New Zealand tried it with Auckland, to no avail. But some of the measures we're looking at, which the treasurer has been a leader in, is to try and get the mix of housing better."
Fraser outlined policies in other areas, such as New York City, where rules oblige developers to assign a certain number of properties in their new building for affordable and social housing.
"To go out and say you're going to target housing prices, it's a very detailed target with some very blunt instruments. That's the difficulty... it goes to state issues about release of land, issues about regulation," Fraser said.
While there was little good news for hopeful homeowners, Fraser did express his empathy for those locked out of the market.
"I don't take any joy in the fact that when I was buying a house in the 70s, it was a far easier process. I don't take any joy that for many families, it's a bigger hurdle to jump than we ever imagined," he said.
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