Ahead of next week’s federal budget, PIPA has called on the government to consider housing affordability strategies that reflect the country’s market needs, rather than “radical changes” like axing negative gearing.
Property Investment Professionals of Australia chair Ben Kingsley – who held discussions on the issue with government representatives in April – says the association welcomes the federal government’s decision to rule out changes to negative gearing.
He said he is hopeful this decision reflects a more measured approach to addressing affordability issues for both buyers and renters.
“Housing affordability is challenging, but there’s no easy fix. We welcome the government’s focus on this issue but urge them to adopt sensible measures that reflect the national market needs, rather than any of the radical changes that have been floated by some corners of the market such as axing negative gearing and SMSF property investment,” Mr Kingsley said.
“PIPA supports thoughtful and varied solutions that promote supply and cool demand, and consider the long-term viability of the market and broader economy.”
Mr Kingsley noted that no policy would be able to reduce the price of quality property in the inner suburbs of major capital cities, due to continued strong demand and limited and geographically-constrained supply. However, he believes strategic policies can encourage more supply in urban locations.
“Potential polices that could stimulate supply include measures that encourage developers to build more family-friendly accommodation, such as three- or four-bedroom units,” he suggested, adding, “Incentives to encourage the release of bulk land lots in new greenfield areas could also boost supply.”
In terms of addressing demand for property, Mr Kingsley emphasised that regulation and education remained key.
“Property investment advice needs to be regulated. This would remove spruikers and speculators from the market. Educating investors about the real and current risks of property investment, and ensuring they are not pressured into poor investments would help to moderate demand and avoid budding investors getting their hands burned,” he said.
Mr Kinglsey said any policy changes that could impact the value of residential housing stock – estimated by CoreLogic to be worth $6.9 trillion – “need to be thoroughly considered”.
“The residential property cycle plays a significant role in the country’s overall economic performance,” he said.
Mr Kinglsey also stressed the role property plays in building everyday Australians’ wealth.
“While high property prices can be incredibly frustrating for those trying to enter the market, we need to remember that property is a key feature of many everyday Australians’ wealth creation strategies," he said.
“Property is an accessible, trusted source of wealth that can help just about anyone build a better future. We need to be very careful when it comes to playing around with measures that could hurt the value of these assets.”
[Related: Risk of SMSF lending issues is ‘remote’]