2017 Budget a good balance for housing supply and affordability: Chris Johnson
GUEST OBSERVER
The Federal Government has achieved a good balance between encouraging more housing supply as well as policies that make housing more affordable.
Federal Treasurer, Scott Morrison, has carefully balanced the need to boost housing supply with policy levers that make housing more affordable in this year’s budget.
To unlock housing supply the budget allocates $1 billion for critical infrastructure along with $70 billion for transport infrastructure while working with the states to reform planning systems to speed up development.
To encourage more affordable housing the budget has lifted the Capital Gains tax discount to 60 percent where private investment is made in affordable housing.
This will be a real incentive for the development industry to invest in this area particularly if the bond aggregator through the National Housing Finance and Investment Corporation is available to the private sector.
The proposal to have Managed Investment Trusts to develop affordable housing to hold for rent for more than ten years is another positive move.
The proposal to encourage older people to downsize from large houses through allowing up to $300,000 from the sale of a house to be invested in a superannuation fund is a good way to facilitate this process.
By not overacting in the areas of negative gearing and the potential to reduce capital gains tax reductions on property, the Government has clearly understood the sensitivities in the role of investors in maintaining a viable rental housing market.
To pull policy levers in an aggressive manor could lead to a devaluation in the main asset that many families rely on in their own home.
The establishment of the Western Sydney Airport Corporation with funding of $5.3 billion to drive this important game changer project for Sydney is important in maintaining the momentum for this giant project.
The allocation of $1.7 billion through the Asset Recycling Fund to the Sydney Metro project will help progress this important infrastructure that will underpin where new urban development can be located in metropolitan Sydney.”
We are impressed with the careful balance the federal budget has achieved between stimulating much needed housing supply while developing policies that help with housing affordability.
As indicated in the budget papers the state governments will now need to reform their planning systems to ensure more homes are built more quickly for Australian families.
The Federal Government in working with the states on planning reform must question why New South Wales standards for apartments are so much higher than those in other states.
The well-meaning but expensive standards in the NSW Apartment Design Guide are adding around $100,000 to the cost of an average apartment above that of other states.
The Urban Taskforce is keen to work with the federal and state governments to achieve reforms to planning systems that can speed up development.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted here.
