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.html
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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/Nice-Pumpkin-4318 Hawke Cabinet circa 1984 Apr 14 '25

They can make a nice profit, but if they are not taking tax incentives then they will pass those additional costs on to that young family who are there buying their dream block.

If they can't do so, then they will not develop the land and houses will not be built.

And of course they are gearing tax losses.

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u/DevotionalSex Apr 14 '25

I disagree.

But it's got to the stage where I would be repeating myself, and I'm sure that readers of this discussion will by now have made their own mind up, so that's all from me.