A leading housing association has added its voice to those challenging claims that there is a property price bubble in Australia, saying that widespread speculation about a housing bubble ignores the real culprits of Australia’s housing affordability problems.
According to Housing Industry Association chief economist, Harley Dale, we wouldn’t be having this conversation if Australia would get the “disproportionately high level of taxation” off new homes and improve the supply of new housing.
“The truth is that most of the problems having an impact on housing affordability are caused by governments and therefore governments can fix them,” he said.
“The two biggest taxes on a new home are stamp duty and GST – the latter which doesn’t apply to existing homes – and when combined with all the other taxes, levies and charges on a new home can be over 40% of the final price.”
In fact, new housing is the second most heavily taxed major sector of the Australian economy, according to Dale.
Further, Dale says that delays in planning and restrictions on land supply mean that new housing is not reaching the market quick enough to respond to demand, which ultimately puts upward pressure on prices.
This argument echoes what Mortgage Choice chief John Flavell
said, who has also dismissed claims that there is a property price bubble in Sydney, and to a lesser extent Melbourne, instead saying it is more just a case of supply and demand.
“If you are prepared to believe basic rules of supply and demand do not apply to the Sydney and Melbourne property markets, and if you believe the population is about to go backwards overnight.
“If you believe that we will be able to manufacture new land close to the heart of our busiest urban centres, if you believe that we are all about to flee to the country and there is a fleet of trains that could take us there and if you believe we all want to move our families into studio apartments and forego our houses, then you just might believe that a property bubble exists in Sydney and Melbourne.”