https://www.xxzza1.com
18.6 C
Newcastle

Developers creating major housing crisis

SHARE

A prominent economist has criticised government support for first home-owners, labelling them “builder and developer profit margin enhancement grants”.

Saul Eslake told a federal parliamentary committee examining housing affordability the funding designed to bring new people into the market was driving up both house and rent prices, in turn creating a more attractive market for property investors.

Eventually, he said, low-income renters pay the price with higher rent.

“When people say property investors play an essential role in providing rental housing, they do so only because they increase the demand for rental housing by squeezing people who would otherwise have bought those properties to live in them,” he explained.

In his written submissions to the inquiry, Mr Eslake lashed politicians’ “crocodile tears” regarding those unable to own a home.

“Deep down they know there are far more people who already own at least one property, and who therefore have a very strong interest in policies which result in continued property price inflation,” he wrote.

Australian Housing and Urban Research Institute director Steven Rowley told the inquiry private developers were bringing 99% of new properties onto the market, despite being unable to produce houses suitable for low-income earners.

He added the country faced a “major challenge” with median income earners not able to afford a median-priced home.

CoreLogic researcher Eliza Owen noted conversation surrounding house prices only reached government and media when more wealthy people were affected, adding the long-term decline in ownership rates were mostly in low-income cohorts.

“That would suggest that you have widening wealth inequality perpetuated through Australia’s housing system,” she said.

The Grattan Institute’s Brendan Coates agreed, adding it would have “very profound consequences” on society’s structure, particularly in retirement.

“If you own your own home in retirement, you’re a very good chance of living a very comfortable retirement,” he said.

“If you are a renter, then given the current structure of our income support system, you are potentially in quite a lot of trouble.”

The committee was told just 2.5% of established properties were on the market at any time, down from 4.5% in 2008.

SQM Research’s Louis Christopher said ownership rates could improve if negative gearing was phased out across three to five years, adding improved infrastructure in regional towns could be vital to encouraging populations to spread.

He stressed the need to address ownership issues in the short-term before “Big Australia” sees the population swell to projections of 40 million people by 2050.

The hearing comes as Labor ramps up its campaign message about Australia’s housing affordability crisis in marginal seats.

Labor’s housing spokesman Jason Clare has been criticising the government’s failing housing policy in seats like Gilmore and Hunter.

He recently visited Gillieston Heights, Maitland and Cessnock to hear local MPs’ concerns, including Paterson’s Meryl Swanson.

“It’s harder to buy than ever before, it’s harder to rent than ever before and there are more homeless Aussies than ever before,” he said.

“We need to do more to make it easier for young families to be able to buy a home and raise a family in the Hunter region.”

Get all the latest Newcastle news, sport, entertainment, lifestyle, competitions and more delivered straight to your inbox with the Newcastle Weekly Daily Newsletter. Sign up here.

More Stories

Newcastle Weekly

Subscribe To Our Newsletter

Subscribe to Newcastle Weekly. News, Community, Lifestyle, Property delivered direct to your inbox! 100% Local, 100% Free.

You have Successfully Subscribed!