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ACT Government Committed to Unaffordable Housing

By arescarti42 20 January 2014 44


The good folk over at Macrobusiness have been doing an excellent job over the past week highlighting the ACT Government’s outrageously terrible and damaging policy when it comes to supplying land for new homes (see here, here, and here).

Despite strong population growth, stratospheric house prices, and the ACT Auditor General finding the ACT’s land release program woefully inadequate, the ACT Government announced last week that it would be making the problem even worse by scaling back its land release program. This comes a little more than a month after the limited land release at Lawson saw blocks selling for around $100k over the asking price, at an average of ~$500k per block.

Today the Canberra Times reported that the LDA has decided it will no longer be selling land to developers, giving the Government a complete monopoly on the supply of new blocks.

I personally find this behaviour by the ACT Government unconscionable. The fact of the matter is Canberra is a tiny city blessed with abundant land suitable for residential building, but the Government insists on strangling supply to boost their land sales revenue, putting secure shelter, a fundamental human right, out of reach for an increasingly large segment of the community.

If you care about bringing the Australian dream of home ownership back within reach, then I’d urge you to get in touch with Andrew Barr and your other local members, and let them know.

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ACT Government Committed to Unaffordable Housing
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steveu 8:51 pm 21 Jan 14

The council is so heavily dependant on rates and stamp duty for its very fiscal viability, it’s constantly trying to find new ways to drive up prices. With the fed govt clearly aiming to get rid of as many Canberra jobs as possible, it’s pretty obvious they are terrified of a mass exodus the likes of which we had in the 1996-97 when the fed govt cut apx 20,000 jobs.

Ryoma 5:37 pm 21 Jan 14

It’s been interesting reading the various comments on this topic, I have learnt things I didn’t know.

But I’d suggest there are some things we all need to think about:

Sooner or later, many of the Baby Boomers are going to reach an age where they need either home help/assisted living in a retirement village/full-time care in a nursing home. That might be 10 years away, it might be 20, but it is coming.

Tied up with this is how the ACT Government gets funded. While I don’t necessarily agree with all of the policy being put forward, as a community we face lower revenues and higher costs in relation to our aging population. At present, the ACT Government funds education, health, and other things like a State government, as well as the equivalent local council services. So we have two choices: either we find a way to lift the amount of revenue coming in, or we cut into those services.

The fact is, we don’t have much else we can tax beyond housing – there is not a big commercial or industrial base here, and that is unlikely to change. Our flow of economic activity is likewise not broad or deep enough to tax on a percentage basis sufficient to supply much revenue. Houses and land don’t move (excluding natural disasters) and so remain easy “targets” to be taxed.

There is also (often) an assumption that most people want to own houses. At present, I’d rather not – much of Canberra’s housing stock is run-down, poorly built, and tied to the 1970’s idea of driving everywhere. I rent in a location with decent public transport, and my housing is comfortable, safe, and warm, if a little on the small side.

But I am more concerned about investing for my own retirement, well away from property. Has anyone thought about what things will look like economically if (as a nation) we continue to borrow money for housing, rather than more productive things that generate ongoing employment?

If there is a housing crash (or even just a long-term stagnation), then I think many of us, both renters and home owners, will be in strife. If the price of a Baby Boomer’s investment property drops from the $500K it is worth on paper down to (say) $300K, that will be $200K less that person has for retirement. In turn, that makes it likely said person will run through their superannuation faster (and what does a large, even gradual sell-out of super fund holdings do to share prices?), and may reach the point where they depend solely on a pension….paid for by those who are still working.

On the other side of things, while renters may rejoice at getting their hands on said property at $300K, it’s still $300K that needs to be paid off. Given that many people are starting at later ages in terms of getting on the property ladder, can we afford to buy said house (including all of the interest needed) instead of saving that $300K towards our own retirements? And this is likely to occur at a time when taxes and charges will be going up, and there is less employment growth around, in both government and private industry.

I would like to own a house one day, but it’s really not that important to me. I’d prefer to ensure my finances are large and liquid enough to actually support myself and my family in my old age, rather than have to rely on what I imagine will be a pretty threadbare welfare system by that time.

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