ienna, the celebrated home of Freud, Mozart, Beethoven and cherry strudel, is in many ways quite similar to Sydney and Melbourne. All three regularly compete for the title of “world’s most liveable city”. All have good coffee, low-ish crime, attractive historic buildings, opera houses and excellent pastries are modest apartments in high-density neighbourhoods with space for growing families and shared facilities such as rooftop swimming pools.
How did we get ourselves in such a pickle? How do other countries manage so much better? What’s the solution?A housing crisis is not a modern phenomenon. “Authoritative statements at the weekend dashed any hopes of a quick end to the housing shortage,” said Queensland’sbemoaned “the worst crisis in rental accommodation in Canberra’s recent history”.
As independent economist Chris Richardson put it, “Australian house prices are harder to kill than John Wick” . Not even the pandemic or 13 interest rate increases in a row could do it.calculates that a household earning the median income in Australia could, as of June 2023, have afforded just 13 per cent of homes sold across the country – the lowest share since records started in 1995.
blamed that era’s housing crisis on building workers “loafing on the job”. This, he contended, “coupled with the 40-hour week, is the reason for home shortages”. Bottom line: supply of houses is the number one factor, say state and federal governments. “There are not enough homes being built in the right areas to meet the needs of our communities,” the Federal Treasury said in this year’s budget.Treasury points out Australia has among the lowest number of homes as a proportion of the population in the developed world.
Running an investment property at a loss might seem silly. Yet plenty of people have been keen to do it – and simultaneously with multiple properties. This is at least partly because of the generous way we tax capital gains today, a function of a rule change in 1999 by the Howard government on how profit from investments was taxed. The new rules said that if you held an asset for 12 months or longer, when it came time to sell, you would be taxed only on half the profit.
Michael Fotheringham suggests reining in negative gearing and capital gains tax concessions might help prospective buyers who otherwise would be competing with investors. On the other hand, fewer investors would mean fewer rental properties. “Now supplying rental stock is important – we’ve got lots of renters, it’s a growth market.”We’ve been here before.
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