Housing Australia Future Fund Bill 2023

There's always a lot of noise about real estate, if the market isn't booming or crashing, there's a rental crisis. Put all the noise aside and let's consider the following;

  • housing is an essential basic need for everyone
  • housing cost is the sum of "land" & "improvements"
  • owning real estate means paying for maintenance, repairs and statutory outgoings
  • NSW Gov Land Tax revenue for 22-23 of $5.65B , up from $4.85B 21-22 and forecast to increase to $6.35B in 24-25
  • Stamp Duty raised in 22-23 $10.8B
  • Total NSW Gov revenue in 22-23 of $39.6B
  • 41.5% of the NSW Gov revenue comes from Property Taxes
  • As of June 2022, New South Wales had the highest number of public and community housing dwellings in Australia (96,700 and 54,300 dwellings, respectively)
  • from 2021 census data 944,585 dwellings are leased, being 32.5% of all dwellings.
  • Public and community housing therefore represents about 15% of leased dwellings
  • In 2021-22 alone, the NSW Government is spent over $1.19 billion ($1,137 million recurrent and $51.2 million capital) across social housing and homelessness programs in the Stronger Communities Cluster. This represents approx $8,000pa per dwelling

Labour and material costs have never been higher. This has resulted in substantially higher construction costs and maintenance costs. Why have economist been surprised with higher house prices?  Insurance premiums, council rates and land tax are also rising dramatically. The rising costs and high interest rate environment is taking  the shine of property as an investment. We are seeing current landlords exit the market with very little investors stepping in.

The Government is trying to create a "build-to rent" model which will only benefit a a couple large scale property developers. The majority of landlords are individuals, burdened by Land Tax "Bracket Creep" with no policy relief.

A slowdown in investor activity will result in greater requirement for Public housing.  Headlines fail to recognise the on-going cost of providing public housing, the more public housing there is, the more the on-going cost will be. 

Increasing property taxes is not a solution. Stamp Duty makes it hard for owner occupiers and investors to enter the market. Land Tax makes owning rental properties near impossible exercise (Land Tax in NSW for landlords above the threshold represents 30% of the gross rent).

Land Owners should not be the State Governments answer to their budgets. Victoria has now reduced the Land Tax threshold. Let's see how Vic rents rise compared to NSW over the coming year.

Federal Government policies are pure puff. Landlords are being Taxed through the nose for providing an Essential Service.

The current trajectory is a downward spiral of higher rents, less available private rentals and greater demand on Public Housing.

Trying to entice old people out of their home is not a solution. Has any research been conducted on under utilised Public Housing? How many single people are in 2 or 3 bedroom public housing dwellings?  Relocating public housing tenants is a political nightmare hence not addressed. 2021 Census data indicates there is an average of 3.1 bedrooms per dwelling across NSW and only 2.6 occupants, noting a couple should share 1 bedroom, this means there is likely about 150,000 empty bedrooms across current NSW public and social housing dwellings. In the private sector, the increased holding costs have left landlords with no choice but to raise rents. When faced with a rent increase, tenants re-visit their needs and move accordingly if they will be paying too much for space they can do without. In the public sector, rents are charged derived on household income, there is no relationship between the rent / size or market, hence single people in 2 bedroom apartments and houses have absolutely no incentive to move. Their rent will remain the same if they go to a 1 bedroom apartment.

So let's cut out a lot of the noise and go back to basics, let's properly utilise our current public sector housing stock before before we rush to more high density, complex "affordable" housing policies and funding to provide more public sector dwellings that will need indefinite funding to be sustained.

There's a reason why "Negative Gearing" was a thing, essentially the private sector can offer rental dwellings much more efficiently than the government. Real Estate sector wages are dramatically lower than government sector wages, agents & landlords get quotes and negotiate with trades where as trades engaged by the government charge like bulls and private sector tenants are more accountable for damage. Real Estate agents offer a much more prompt service and can talk tenants through things like changing a light bulb or resetting a fuse rather than having a public housing appointed trade charge hundreds of dollars. When multiplied by 150,000 dwellings, these little costs become quite significant.

Governments need to stop looking at how much they can tax property owners and look at how much they save through private sector rentals.



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