CoreLogic research director queries affordability report

CoreLogic’s research director Tim Lawless has published his summary of the tabled report following the inquiry into housing affordability and supply in Australia, celebrating its 16 recommendations that aim to address factors such as supply and demand, taxes, funding as well as “administrational inefficiencies”, suggesting these would, over time, reduce rising value and lack of supply. 

However, Mr Lawless has also flagged concerns over how three specific recommendations will be implemented, as well as whether any pitfalls that face their introduction have been addressed.

One example orbits the report’s recommendations to remove stamp duty across the country – a call that has been praised by the Housing Institute of Australia and the Real Estate Institute of Australia – with the research director suggesting there could be pushback from state governments. 

“Through the 2019/20 financial year, stamp duty on conveyances comprised 18.1 per cent of all state and local government revenue; a figure that has likely increased substantially over the most recent financial year due to surging housing values and record levels of transactional  activity,” Mr Lawless wrote. 

Similarly, Mr Lawless queried the report’s recommendation for an increase in housing density – namely from stakeholders opposed to “larger populations and taller buildings in their communities”. 

“Focusing on the suburbs along Sydney’s rail network as an example, the average population density for Sydney [Statistical Areas Level 2] regions along the train line and within 20 kilometres of the CBD has increased from 3,791 people per square kilometres to 4,069 people per square kilometres,” Mr Lawless said, “but some of these locations are still showing relatively low population densities, such as Turramurra (999 people per square kilometres), Wahroonga (East)-Warrawee (1,338 people per square kilometres) and Pennant Hills-Cheltenham (1,662 people per square kilometres).”

However, the research director also noted that incentivising higher densities for residents alongside measures to protect the character of housing “should help to overcome local opposition”. 

Concerns about super’s equity

Mr Lawless also flagged concerns over the recommendation of superannuation being used as collateral for first home buyers, noting that while access would improve, it could have adverse effects. One would be an increase in demand, if the scheme wasn’t introduced with a commensurate addition to housing supply – which is also recommended in the report. 

But Mr Lawless also said that an additional issue is that not everyone possesses the same amount of super. 

“Those in the lowest income quintiles in Australia have seen the most substantial declines in home ownership between 1981 and 2016. If the goal of the inquiry is to promote home ownership more widely, then approaches should be equitable. 

“At first glance, allowing anyone to use their superannuation as a home loan guarantee would presumably most benefit high income earners.  

“To make a scheme more equitable, its implementation may include income caps or a maximum on the value that can be used as collateral,” he said.

[Related: Housing bodies celebrate, condemn affordability report]