Listen: Katrina Roe chats to political correspondent Ky Chow about housing prices.
With Sydney housing prices still sky high and climbing, Hope 103.2 announcer Katrina Roe and her family are one of the many in Sydney still waiting to buy their first home.
In her search for some hope about housing affordability, Katrina caught up with political correspondent Ky Chow about some of the possible solutions to the housing crisis.
Is Building More Houses Going to Work?
Politicians may desperately want to help Australians buy a home—but whether their solutions will work is another story.
One solution NSW Premier Gladys Berejiklian has been advocating for is the “supply-side solution” – build more housing. But will it make a difference?
“It isn’t necessarily going to be a great solution,” Ky said. “We are building a lot of new housing already. And there’s a lot of new apartments, but the problem is they’re not cheap. Property developers are attracted by the current prices. So why would they put them up at the lower prices?
“And the vast majority are being snapped up by investors, not home buyers. “
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Are Foreign Investors Really Stopping Aussies from Owning Homes?
Many governments and thinkers have put forward solutions for affordable housing, but in Ky’s opinion, the housing crisis can only be solved with a multi-pronged approached.
“I think we’re going to need a lot of magic bullets to solve this,” he said. “Housing supply is one of them. But another issue is, there’s a lot of investors still in the market.”
One Hope 103.2 listener, Linda suggested that more restrictions need to be placed on foreign investors.
“It’s got to the point where people ask the estate agent, ‘Are there any Asian bidders bidding for this place that I’m interested in?’ because if they are there’s no point turning up – because they’ll outbid you every time,” she said.
To address this problem, in 2016 the NSW Baird government increased restrictions on foreign investors, and Ky Chow said that banks have already upped the ante on investment loans.
“That should be helping home buyers,” he said.
But economy writer Geoff Winestock believes fears about foreign invetsors ‘taking over’ Sydney are greatly exaggerated anyway. He says most Chinese real estate investors are in fact “permanent residents of Australia who are making a long-term home here under Australia’s migration program” and deserve to be treated like any other citizen.
Is the Government Brave Enough to Create Tax Solutions?
New tax rules around housing would go a long way towards helping first home buyers, but is there enough political will?
“Tax solutions include getting rid of negative gearing and changing the rules around capital gains tax,” says Ky chow. “And potentially replacing stamp duty with a land tax.
“But unfortunately every time one of those areas comes up, it gets shot down because there’s a huge political response from, say, the mum-and-dad landlords and also property developers who can be very influential in the government.
“I think we’re more likely to see other ideas, smaller ideas that won’t upset the apple cart quite so much, coming from the government.”
Housing Needs to be Built Near Employment
Deputy Prime Minister Barnaby Joyce suggested people struggling to get a home should consider moving to the country. But his comments have been criticised as out of touch by politicians and welfare agencies, who point out the lack of diverse employment in regional areas.
A Hope Mornings listener, Caroline, was a prime example, phoning to share her story of moving to a cheaper area.
“If you make the change [to a new area] you have to take on everything that it brings.” Caroline, a Central-Coast-to-Sydney commuter.
“Because of sickness we couldn’t afford to stay in Sydney so we decided that to relieve our financial pressure we decided to sell up and move to the Central Coast. I thought, ‘I can get a job up here, easy!’ But I couldn’t. The jobs here are only casual and part time. I commute to Sydney.
“I go through a car every two years; I do about 50,000 kilometres a year travelling. The other day it took me four hours to get home on the train because of delays. If you make the change [to a new area] you have to take on everything that it brings. We have a lovely house on the beach but I’m never here to enjoy it.”
A better solution may be to develop new housing precincts in employment hubs like the Sydney CBD and Macquarie Park, suggest Ky Chow.
“In Macquarie Park they’re looking at developing an innovation district there, because they’ve got a hospital, a university and a bunch of tech companies,” he said. “You have seen places like Silicone Valley become [housing] destinations in themselves. But you have to make them places people actually want to live and walk around in and not just drive in and drive out of.
“Those are all options the government is looking at, within the bounds of their political constraints.”
Fingers Crossed for the Federal Budget
For home-buying hopefuls waiting on a political solution, there’s hope, says Ky. He believes there’s enough political will that we may just see a change.
“The fact that Gladys Berejiklian has brought in Glenn Stevens, the former Reserve Bank Governor, to look specifically at this issue of housing affordability, he will certainly need to be seen to be putting something forward,” he said.
“The Liberal Party has appointed Micahel Sukkar who is 35 and who should understand the challenges his peer group is going through in housing affordability.
“And soon we will have a Federal Budget and there has to be something concrete for Malcolm Turnbull to put into that, to show he’s doing something about housing affordability, to show he’s a strong leader.
“He’ll be very keen to show he’s not just in survival mode.”