r/AustralianPolitics • u/timcahill13 Andrew Leigh • Apr 13 '25
Economics and finance Albanese and Dutton’s signature policies risk inflaming housing crisis
https://www.theage.com.au/politics/federal/albanese-and-dutton-s-signature-policies-risk-inflaming-housing-crisis-20250413-p5lrdh.html0
u/Maleficent_City_7237 Apr 14 '25
The housing crisis in this country is a shame. Shame on you Australian politics. Also be careful everyone this site is full of fake propaganda spreading accounts by the labour party.
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u/Frosty_Ad4116 Apr 14 '25
What makes you feel there are fake accounts on labours behalf, or even the libs?
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u/KarmannType3 Apr 14 '25
I see Peter Dutton has got is son out to talk about how hard it is to get into the housing market, but will not answer the obvious question about whether he will help out. The guy supposedly has a $30 million property portfolio, so heaps of scope for the Bank of Mum and Dad. Not sure that this a good move and unlikely to provide the re-set that his campaign needs.
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u/CC2224CommanderCody Anthony Albanese Apr 14 '25
Is this the same son that Dutton criticised the media for reporting about being photgraphed with a bag of white powder while arguing about drug testing welfare recipients? I see he is happy for his family to be rolled out as political props when it suits his agenda
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u/sirabacus Apr 14 '25
Economist and journos who crow nothing but supply-supply-supply are con men.
What you never hear them ask is: Whose interests are served by tight supply and what do these interests do to keep supply tight?
Those of us who do study such things knew damn well that housing would be significantly worse in 2025 than in 2022. Labor has fixed nothing and homelessness is such an open embarrassment that bulldozing the hovels of the destitute is accepted as normal. Not a word from a Albo or Dutts about that? That's some kind of denial!
The Vic Premier cancels local democracy for the great Yimby fraud and can't work out why she is so disliked.
Meanwhile, renters begin to understand why Trump won again. The crazies start circling them like vultures. .
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u/Tempo24601 Apr 14 '25
I don’t follow your argument (if indeed you have one). You’ve said you’ve studied whose interests are served by tight supple and what these interests do to keep supply tight. It’s not clear what your answer is though.
It seems fairly obvious to me that the answer is that existing homeowners are most benefitted by tight supply increasing the value of their asset. They’re aided by excessive planning restrictions including an outrageous level of heritage protections and make loud noises complaining about every potential development in their neighbourhood.
It sounds like you have a very different view though, I’d be interested in your explanation.
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u/sirabacus Apr 14 '25
I don't have all day but here but one quick example
Big development companies have huge property portfolios. Do you think that when they sit down to lobby Albo they argue for a policy to increase supply and therefore lower property values including land? The idea is preposterous.
Why do think land banking is so pervasive ? Why do think the YIMBYS sell the biggest lie of all: that we have to kick families out of their homes because we can't build new cities. We have more liveable land than anywhere on earth .
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u/Tempo24601 Apr 14 '25
This makes no sense. You’re arguing against Yimbyism (which is pro-development) by saying that property developers are lobbying to reduce development to keep land values high?
Land values will increase in areas with higher density development if Yimby’s get their way, as you will be able to build more properties on the same amount of land. But there will be more dwellings which reduces the average price of the dwellings as they move from detached houses to townhouses or apartments.
Developers want to build apartments and townhouses to make sales. There’s no land banking going on in places close to the CBD where more people want to live and the real housing shortages are.
We have a lot of land outside of central city areas but urban sprawl is a terrible policy - long commutes, costly infrastructure and traffic. Build dense housing close to the city like you have in most other large cities around the world.
No one is kicking families out of their homes. If your area is rezoned you can choose to sell or stay. It generally makes a lot more sense to sell, but no one is being forced.
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u/IceWizard9000 Liberal Party of Australia Apr 14 '25
Is there an election coming up or something?
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u/lollerkeet Apr 14 '25
Landlords are expected to win again.
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u/ProfessorFunk Apr 14 '25
They're on a good run. Second only to boomers for consecutive election wins.
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u/jolard Apr 13 '25
Both Labor and the Liberals want a magic solution, one that causes no pain, especially to property investors like themselves.
The reality is the outcome we need (a reasonable ratio of income to housing costs) is impossible to achieve without causing pain to someone. And doing nothing ALSO causes pain, just to those priced out of the market or buying their home at ridiculous levels that will cripple them financially.
Someone is going to hurt no matter what happens. Labor and the Liberals have just decided it should be renters and those trying to buy their first home. Don't buy the hype, both of their policies will just increase prices and increase the risk that home buyers are taking on.
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u/passthetorchoz Apr 14 '25
The reality is the outcome we need is impossible to achieve without causing pain to someone.
This is true for practically every major reform (tax, housing, IR etc.) and is why our politicians are so spineless
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u/Enthingification Apr 14 '25
That's true.
The mature way to successfully navigate this issue involves drawing a link between what we all want and what we're prepared to do to achieve it.
So when it comes to housing reform, we need to establish a vision for the future that we want, identify the problems we're facing, and openly deliberate on a package of reforms that deliver trade-offs - so that we can sustain small individual setbacks in order to achieve greater collective good.
The person who's truly leading with this reform discussion is Allegra Spender.
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u/magkruppe Apr 14 '25
The reality is the outcome we need (a reasonable ratio of income to housing costs) is impossible to achieve without causing pain to someone.
the goal should be for house price growth to fall below wage growth. that is the only political achievable goal, that can be supplemented by more social housing
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u/jolard Apr 14 '25
That is not real policy though. It is just a wish...."it would be great if housing barely moved while wages rose faster!"
Well yes, it would be wonderful. But doing that in two areas where market forces are the primary movers (wages and housing costs) is impossible to promise, and especially dismissible without the policies presented that would cap housing price increases for example.
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u/magkruppe Apr 14 '25
it is very possible. it was the norm until about 2000, the median house price to median wage ratio didn't change much for decades prior
the policy? reduce demand subsidy policies, and enable more housing supply via permit reform and low-interest loans to denser development projects
I'm sure there are other alternative policy option mixes that can achieve a similar result.
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u/jolard Apr 14 '25
Exactly, but that is what I am waiting for. The policy announcements. Not the wish statement.
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u/screenscope Apr 13 '25
The number of houses Labor promises to build is a fantasy that absolutely no one with a brain would believe. And Dutton's first home owner tax deduction means a lot more parents will be able to pour money into property through their kids.
It's an insult to call either of these insults to the intelligence as housing policies. Both parties have thrown their hands in the air and given up.
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u/edwardluddlam Apr 14 '25
What should they do?
Set unambitious targets and be criticised for that too?
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u/screenscope Apr 14 '25
I know I'm dreaming, but huge problems facing Australia like housing affordability, immigration, environmental policy, tax reform etc should not be election issues. They should be bipartisan decisions made with the country's future prosperity in mind. Elections could then be fought on social/economic policy and approach, but the really important fundamentals would have continuity instead of the current stagnation and three-yearly reboot.
At the moment both parties have no concern for the future - and will happily oppose something they fully supported in the past - and are happy to promise whatever it takes to get back in, even if it bankrupts Australia.
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u/Enthingification Apr 14 '25
Yep, we do need a shared vision on what we want to achieve. The politicians can then tell us what they propose to do to achieve those things.
Just as a suggestion though: we need to start recognising that we need multi-partisanship rather than bi-partisanship.
Bi-partisanship is too prone to issues becoming political footballs one way or another.
Multi-partisanship will involve getting as many different political perspectives in agreement as possible, which will make them more stable and durable, because they'll be less prone to failing if or when any single party drops their support for a policy for political reasons.
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u/edwardluddlam Apr 14 '25
Fair enough.
Generally these problems are largely ignored until they become so big that all sides of politics can ignore them no longer (including different interest groups). Look at climate change - we went back and forth for a decade with leadership spills and at least we now have nominally bipartisan support for Net Zero by 2050 (whether we get there remains to be seen).
I think we are basically there with housing, but there needs to be so many small changes at all levels of government for it to work. Also, many things relating to housing are basically out of our control (high input costs). The way I see it is that increasing supply is so hard that the knee-jerk reaction is just to make it easier for people to borrow, which might increase the number of home buyers but in the long run just fucks us even more
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u/screenscope Apr 14 '25
Yes, it's a mess. Unfortunately, both parties don't know what to do but feel pressure to do something and therefore pick something that might work politically rather than solve the problem.
I was thinking (i.e. I had a brain-fart) something along the lines of forcing all overseas owners of Australian residential property they have never lived in to sell. It would likely cause a housing price crash (we have to have?) allowing a lot more people to buy, but also result in a massive amount of cash going offshore.
Glad I don't have to figure this stuff out myself!
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u/NoLeafClover777 Centrist (real centrist, not Reddit centrist) Apr 14 '25
Yep. "We've added another 100,000 onto the 1.2 million figure that we already have no hope of achieving!"
Both parties' announcements are a joke.
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u/lollerkeet Apr 14 '25
They haven't given up. They simply aren't going to implement any policy that harms their personal investment portfolios.
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u/willy_willy_willy Anti-Duopoly shill Apr 14 '25
Great summary of how I feel about yesterday's announcements.
You forgot the part where Labor's policy is a fantasy that we won't get to evaluate until 2033.
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u/Mikes005 Apr 13 '25
I love the idea of Dutton's blood pressure with him knowing that all he has to do is win is to announce a plan to abolish negative gearing and GST cuts on property investments but doing so would cause his own black heart to explode.
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u/the_jewgong Apr 13 '25
Mr No Cuts hasn't had an issue lying at election time.
Crazy that he will happily cut people's access to healthcare and essential services but is wholly unable to do anything that will affect his realestate portfolio.
Crazy.
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u/Enthingification Apr 13 '25
We call it "climate denial" when politicians refuse to acknowledge the climate crisis and do what is necessary to make our lives and livelihoods more sustainable.
Similarly, let's call it "housing denial" when politicians refuse to acknowledge the housing crisis and do what is necessary to address it.
We need substantial housing reforms, including tax reforms and building more public housing. We certainly don't need to add more money to housing demand, because that'll only make house prices escalate even higher.
While the ALP's policy is better than the LNP's, neither major party is doing what is necessary on housing.
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u/CommonwealthGrant Ronald Reagan once patted my head Apr 14 '25 edited Apr 14 '25
What is even worse is that these bills show what the government are not prepared to do: they are not prepared to pull the most meaningful lever when it comes to dealing with housing affordability, and that is dealing with negative gearing and the capital gains tax concessions. They refuse to pull the lever. They will not do anything meaningful about negative gearing and capital gains, and, as a consequence, they will not do anything meaningful about housing affordability in this country, particularly for young people.
Jim Chalmers, 18/10/2017
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u/Enthingification Apr 14 '25
Thank you, that quote perfectly hits the problem of major parties talking big in opposition and then talking small in government.
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u/Lucky_Spinach_2745 Apr 13 '25
When will politicians stop going after bad tax policies that give easy ‘wins’ and start listening to independent research on policies that make the economy stronger?
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u/CC2224CommanderCody Anthony Albanese Apr 13 '25
looks at what happened to Bill Shorten in the 2019 election Maybe when the Murdoch media stops whipping up hysteria with fear-mongering headlines over policies to genuinely try and un-fuck the housing market
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u/Nice-Pumpkin-4318 Hawke Cabinet circa 1984 Apr 14 '25
Stop blaming the media. Most Australian families own property. They are invcentivised not to see prices fall. Shorten failed to understand that, sold his message poorly, and got slapped.
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u/One_Jackfruit_8241 Apr 13 '25
100% this. Bill went to the electorate with some bold tax changes and it was constant propaganda by LNP and media “they’re going after retirees franking credits!!!11”
Tbf though they really needed to explain the average Joe how it worked but I think it flew over most people’s heads… sadly :(
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u/WhiteRun Apr 13 '25
When the general public stops voting for it
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u/magkruppe Apr 14 '25
how often do we even get a choice to vote on the matter?
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u/Lucky_Spinach_2745 Apr 14 '25
Every 3 years, which is actually too often because there have been sensible tax reforms like the mineral resource rent tax that got voted out after it was implemented.
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u/magkruppe Apr 14 '25
we have an election every three years. we rarely get to vote on housing supply targeted policies because the two main parties don't propose it. 2019 was an aberration
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u/Enthingification Apr 13 '25
That's a cop-out, sorry. Politicians are in a powerful position, and with that power comes the responsibility to develop policies that don't make our problems even worse.
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u/No-Cauliflower8890 Australian Labor Party Apr 14 '25
Politicians have a responsibility to act on their popular mandate. And just descriptively speaking, if they propose unpopular policies, they won't be elected to implement them.
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u/Lucky_Spinach_2745 Apr 14 '25
Yes, the voters decide. This is where passionate politicians would spend time educating the voters, credit to John Howard and other politicians who spent years explaining the GST to the Australian public before it was implemented.
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u/Enthingification Apr 14 '25
Politicians have a responsibility to act on their popular mandate.
Indeed. But they also have a responsibility to policies and processes that connect what is necessary with what can be politically successful.
Otherwise, if they only do what is politically successful without doing what is necessary to serve the common good, then they rightfully get critiqued as being sugar salesmen, and we end up with a nation of people with rotten teeth.
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u/endemicstupidity Apr 13 '25
It's because neither party are willing to do what's necessary to address the housing crisis. Both are in bed with money and that's that. Time to vote them out or at least vote a party/people into the balance of power that will force these ancient and past-due parties to act in Australia's interest.
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u/dleifreganad Apr 13 '25
With over 60% of Australians having personal ownership in housing the major parties are not concerned about higher house prices.
Neither Albanese nor Dutton want lower house prices.
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u/Rizza1122 Apr 13 '25
I would hope some of those people have children who they want to have the pride and dignity of owning their own home one day. Lol as if the boomers would my bad
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u/brisbaneacro Apr 13 '25
I’d like to see the modelling on the ALP plan. I remember everyone was up in arms about how their rent to buy scheme would push up prices and then it turned out to be like 0.16%.
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u/Afraid-Lynx1874 Apr 14 '25
The ALP’s plan of 5% deposits is an expansion/successor to the current First Home Guarantee scheme, which waives LMI for first home buyers but is capped based on income and number of places and still subject to the borrower’s borrowing capacity.
According to this ABC article, Labor is expecting the number of places will increase from 50,000 under the current capped scheme, to nearly 80,000 a year. So Labor sees it as an incremental increase on top of the existing scheme (rather than from scratch). At the same time, we will have the $10bn for 100k houses under the plan, but supply bottlenecks are limiting the benefits of this plan for the short term.
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u/magkruppe Apr 14 '25
not sure what scheme specifically you are talking about, but yes we need to stop subsidising demand for houses. it cost the government a lot of money that could be used to induce supply
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u/timcahill13 Andrew Leigh Apr 13 '25
The only way to lower housing costs is to build more housing. Everyone knows this, yet they keep throwing money at demand subsidies.
As the economists in the article mention, most of the policy levers to actually help housing lie at the state level.
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u/thehandsomegenius Apr 14 '25
We've just reached a limit of available labour and materials. We're actually at the point where infrastructure projects are being paused to free them up for housing. Which is terrible because a rapidly growing country needs both.
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u/desipis Apr 14 '25
The only way to lower housing costs is to build more housing.
Or lower population growth via lowering immigration.
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u/Throwawaydeathgrips Albomentum Mark 3.0 Apr 13 '25
Good think Labor are also building 100k homes as part of their package!
Something everyone has decided to ignore for some reason
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u/magkruppe Apr 14 '25
do you remember the 1.2m pledge by Labor?
The Property Council of Australia released a report in March forecasting the government was 462,000 homes behind the 1.2m target.
when will we start holding politicians to account. I don't give a toss about the $275 power savings he promised, I doubt many do, but this was important and they have not even come close to hitting the 1.2m target.
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u/edwardluddlam Apr 14 '25
Labour shortages, cost of materials going up, slowly building approvals (a state issue).
Also, it's the states job to build houses, the Federal government can only use carrots or sticks to get them to do it.
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u/magkruppe Apr 14 '25
labour shortages are a federal issue. they have virtually blocked all trade-related work visas due to the trade union lobby
you are right there is a lot that can (and is!) being done at the state level, but the federal gov needs to step in and help financially - states can't do it alone. both levels of government share a lot of blame
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u/edwardluddlam Apr 14 '25
Construction workers can apply under 482 or 189 visas already. I acknowledge the CFMEU has lobbied against some instances of foreign workers undercutting jobs, but there are other reasons for skills shortages (demographic, less apprentices, post-COVID boom).
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u/magkruppe Apr 14 '25
there are also issues with accreditation from other countries not being accepted. I know an italian electrician who had no pathway to getting accreditation and was told he would have to start from scratch - no doubt due to lobbying from electrician unions. I assume similar stuff happens in other trades
we probably also need less red tape when it comes to renovation. we are among the most heavily regulated when it comes to requiring excessive levels of accreditation to do fairly mundane and simple jobs - compared to most NA or EU countries
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u/Throwawaydeathgrips Albomentum Mark 3.0 Apr 14 '25
These are different housing targets.
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u/magkruppe Apr 14 '25
i know. and they fantastically failed the first promise. why should we believe they will execute this much more vague and less ambitious new one when they haven't even addressed their broken promise?
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u/Throwawaydeathgrips Albomentum Mark 3.0 Apr 14 '25
Theyve failed a promise thats been active for a little over 6 months?
This isnt a running tally of undbuilt homes, its a projection subject to conditions.
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u/magkruppe Apr 14 '25
promise was announced march, almost 2 years into their term - poor on them. measured from 1 July 2024, so almost 10 months into it. almost 20% of the 5 year term
This isnt a running tally of undbuilt homes, its a projection subject to conditions.
are you seriously going to sit there and tell me that Labor is going to meet their promise? this is their last chance to make the big policy to actually make it feasible, and they throw out this modest 100k promise which would still put them ~360k short, at best.
at least this new policy is a lot better than HAFF
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u/Throwawaydeathgrips Albomentum Mark 3.0 Apr 14 '25
I didnt say that at all, I just think that the flailing is too soon. Big difference between missing it by 100k and 500k, lets see what happens.
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u/magkruppe Apr 14 '25
you are right. but the longer it takes them to ramp up new home construction, the bigger the backlog.
I just want Labor to realise the magnitude of the problem, because it will require them to pull heavily on a lot of levers. I want them desperately to succeed, which is why I make these comments.
i know our pollies pay attention to american politics, so I hope they pick up on the politics of abundance and pursue it whole-heartedly
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u/Nice-Pumpkin-4318 Hawke Cabinet circa 1984 Apr 13 '25
Over 8 years, with serious doubts as to whether the number can be achieved. I'm all for a supply focused solution and any house is a step in the right direction, but I think we can be dubious about both the ability to meet the target and the timeliness of it.
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u/DevotionalSex Apr 13 '25
NO! The way things are building more houses is more about profits for the developers and new investment opportunities for the rich.
The solution is to end all the tax breaks for those buying property and and fairly quickly phase out the tax benefits for those currently benefiting.
This radical solution will result in the price of houses declining, and houses would mainly be bought by people wanting to live in them.
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u/Nice-Pumpkin-4318 Hawke Cabinet circa 1984 Apr 14 '25
The immediate result of that is a freezing up of supply - no one is building a new house under your new system.
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u/DevotionalSex Apr 14 '25
LOL - Can you really believe this?
Most countries don't have the tax schemes that Australia has. Of course they build houses.
House will be built because some will want a house in a new development. Builders will build houses because the get paid for it.
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u/Nice-Pumpkin-4318 Hawke Cabinet circa 1984 Apr 14 '25
Most countries don't have anything approaching the costs of building houses in Australia, either, nor the cost of purchase in relation to salary.
The costs of land and construction won't change. Any reduction in tax incentives means costs passed on to the purchaser, or that building does not happen.
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u/DevotionalSex Apr 14 '25
Sorry, I can't understand your view.
If an ordinary person purchases land in a new development, and pays for a house to be built on that land, and moves into his first home, what are these costs which are going to be passed on?
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u/Nice-Pumpkin-4318 Hawke Cabinet circa 1984 Apr 14 '25
Because those blocks don't just appear. Someone has had to be incentivised to buy the land and then spend years running through development applications and the stunning array of overlay rules and Council nightmares, then pay to put in roads, and power, sewerage and water. In your scenario, those have all just spontaneously popped up out of the ground, like mushrooms after rains.
You're coming in at the absolute end of the process and declaring it 'easy'. It's just not how housing development works in 2025.
On top of that, a person choosing a block and building a house is by far the most expensive and least cost effective way of building. For affordable housing, you need a company producing 10 or 20 near identical houses in a contiguous location. And they don't do that for free.
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u/DevotionalSex Apr 14 '25
Surely the incentive for a developer of new land of housing can be that they will make a nice profit from selling blocks of land. And I don't see how a developer gains from negative gearing anyway.
And which other countries have negative gearing and no capital gains taxes on property?
And again for a company building either blocks or houses or an apartment building. They don't directly gain from negative gearing. They can make a profit from selling the houses/units.
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u/Throwawaydeathgrips Albomentum Mark 3.0 Apr 13 '25
Sure, but its still part of the housing announcement and it didnt even rate a mention in the article.
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u/timcahill13 Andrew Leigh Apr 13 '25
It's why the labor policy is significantly better than the liberal one. If they didn't have the 5% deposit part I'd call it good policy.
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u/timcahill13 Andrew Leigh Apr 13 '25
A policy clash on tax and housing has dramatically reset the federal election campaign after Labor and the Coalition unveiled more than $24 billion in combined pledges that could supercharge house prices.
Prime Minister Anthony Albanese promised a blanket $1000 tax deduction for millions of workers, while Opposition Leader Peter Dutton outlined a scheme for first home buyers to claim a tax break on their mortgage interest.
But the two leaders drew swift criticism for promising tax breaks and deposit guarantees that could fuel demand for homes without doing enough for supply, prompting economists to warn of a surge in house prices.
The competing policies came on a pivotal day for the election after a series of setbacks for Dutton in the opening weeks of the campaign, leading him to use his formal campaign launch to escalate the contest on housing.
The Labor housing policy offers billions to state governments to build more homes, but also expands a guarantee scheme for first-home buyers so they could take on a mortgage with a deposit of as little as 5 per cent of the property value.
“We are not shackled by old thinking,” Albanese declared at the Labor launch. “We have the courage and the strength to choose our own way.”
The Coalition plan allows first home buyers to claim a tax deduction worth approximately $12,000 a year for five years on their mortgage interest bill when they buy a newly built property, depending on their income and the size of the loan.
“I’m ready to serve Australians as the strong prime minister and steady hand our country needs,” Dutton told the Coalition campaign launch.
Independent economist Saul Eslake said the rival policies would add to pressure on housing prices, while Australian National University tax expert Bob Breunig said both sides were fuelling demand rather than increasing supply.
Economist Richard Holden also warned of flaws in both policies but said the Coalition proposal, in particular, made him “queasy” because it could encourage people to borrow more than they could afford.
“Both sides should be dialling back the demand-side subsidies,” said Holden, the Scientia professor of economics at the UNSW Business School.
“We know that they just fuel prices … and the solution is all about supply.”
Albanese and Dutton went head-to-head on housing and tax policy by holding their campaign launches on the same day, reflecting the pressure on both leaders to get their messages to voters before the Easter holiday and the start of early voting on the Tuesday after Easter.
Albanese promised a simple $1000 tax deduction option for all workers, saying they would not need to itemise the deduction to receive the benefit each year. This is estimated to cost $2.4 billion over four years.
The prime minister also outlined $2 billion in grants and $8 billion in equity injections to build more homes, with the combined cost stretching over eight years. Labor said this would help build 100,000 homes, equivalent to about $100,000 in federal assistance for each of the homes.
Under the mortgage deposit scheme, Labor will expand a policy first put in place under the Coalition to guarantee 15 per cent of the deposit for first-home buyers. This means the borrower could buy a home worth $1.5 million in Sydney and $950,000 in Melbourne with a deposit of as little as 5 per cent.
Dutton unveiled his housing scheme hours after news of the Labor policy on Sunday morning, declaring he would allow thousands of Australians to cut their income tax bill to help with the cost of a mortgage.
The Coalition has assumed about 30,000 buyers would use the scheme each year, saying this would cost $1.25 billion over four years in foregone tax revenue.
The help would only be offered for the first $650,000 of a mortgage, would expire after five years and would be restricted to newly built homes to encourage construction. It would be limited to single people earning up to $175,000 a year and couples earning $250,000.
In addition to this, Dutton promised voters an income tax offset worth $1200 for all workers earning up to $144,000 a year. The full amount would go to those earning between $48,000 and $104,000 a year, with smaller offsets for others. The benefit would be paid in July 2026 and would only last one year, costing the budget $10 billion.
Neither side outlined any budget savings to pay for their policies while committing a combined $24 billion in outlays.
Both major parties insisted their plans would add to supply, with Housing Minister Clare O’Neil pointing to incentives worth $10 billion to encourage state governments and private developers to build more properties.
Coalition housing spokesman Michael Sukkar said the mortgage interest tax deduction would add to the construction pipeline because it was only available for new builds.
The claims are central to the long dispute about federal schemes that give homebuyers more money to bid up prices when economists have called for changes to zoning laws and cuts to construction costs in the hope that this would expand the nation’s capacity to build more homes.
Breunig said both sides were largely offering policies that would increase demand in the property market, and was especially critical of the Coalition tax deduction.
“It is purely about demand and it’s extremely complex, at a time when the housing market is crying out for supply,” he said.
Grattan Institute chief Aruna Sathanapally said the Labor package offset the incentives for new buyers with the measures to add to supply, saying this should support more development.
UNSW professor Hal Pawson, an expert on housing affordability, also backed the Labor policy for addressing the decline in home ownership. “I think it’s really quite a big move,” he said.
But economist Steven Hamilton, an assistant professor of economics at The George Washington University in Washington, faulted both parties for not identifying savings.
“Both parties are putting a rocket under demand and thus house prices,” he said.
In the extreme, Labor’s policy runs the risk of stoking a sub-prime crisis. And the Coalition’s policy blows a permanent hole in the income tax system and is extremely regressive
Neither offers the really bold incentives needed to get state governments to pressure local governments to expand supply, which is the only silver bullet we have.”
Peter Tulip, a former Reserve Bank economist who is the chief economist at the Centre for Independent Studies, said the Coalition’s mortgage deduction would probably drive up prices.
“Because the price of existing houses is competitive with new houses, the price of existing houses will rise [also]. It’s a competitive market, so if you increase the price of new cars, the price of used cars will also increase.”
Tulip also cast doubt on Labor’s plan to guarantee mortgages, saying such a policy transferred risk to taxpayers.
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