12 October 2020

What we really need from candidates this election: opinions from the property industry

| John Minns
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Weston Creek

Canberra needs a coherent strategy and framework to support all housing industry stakeholders including homebuyers, tenants and investors. Photo: Region Media.

The 2020 ACT election is almost here, and with each electoral cycle, the property sector waits for our local politicians to propose more innovative solutions for Canberra housing.

Instead of knee-jerk reactions and recycling of discredited policies, Canberra needs a coherent strategy and framework to support homeowners, tenants and investors.

So this election, here is what we would love to see delivered in the next four years.

First, a focus on housing supply and affordability. Lack of suitable, affordable accommodation is keeping Canberra vacancy rates historically low resulting in some of the highest rents in the country. Expensive land, coupled with infill disincentives, are further restricting the affordable supply of homes for sale.

There are positive proposals to increase social and community housing; however, the economics mean that on their own these will not deliver the required affordable homeownership and rental options.

Some candidates and parties have suggested that investment property owners are driven by greed and disrespect tenants’ rights, and that rental property standards should be regulated at a higher level than those for live-in owners, and that forcing owners to increase rents annually is in the interests of tenants already dealing with the high cost of living.

None of this makes sense.

We are looking for a government that will increase competition and supply in the ACT land market to ensure market forces rather than government subsidies drive affordability.

We also want to see them revisit the Lease Variation Charge on residential redevelopment, which penalises homeowners for subdividing blocks to create multiple dwellings. Get the settings right and instead of a tax that raises little revenue, we can incentivise increased supply of in-demand townhouses across Canberra, improve affordability and increase the effectiveness and efficiency of existing local infrastructure.

We also want a government that encourages private investors to meet the shortfall in government housing through property investment. Which leads me to my next point: ensuring property is an attractive investment option.

The most expensive housing policies are those that inhibit investment in housing. Prohibitive levels of rates and land tax, currently higher for investors than owner-occupiers, discourage investment in property. Reduced demand leads to a lack of rental supply. Low supply drives up rents and reduces affordability. We need to break this cycle.

Similarly, setting unrealistic standards for rental properties (not required for other homes), such as minimum EER, removal of owners’ rights, or interfering with the competitive market for rental pricing, are reactive solutions which fail to address the real problem of supply and affordability. We need to ensure investment in ACT housing is as attractive as in other jurisdictions around Australia. Get the settings right for ownership costs and intelligent regulation of standards and we will increase demand from mum and dad investors whose motivations often skew to long-term growth rather than short-term income.

It is also essential that government takes real action toward increasing affordable rental options.

Build to rent, where developers build properties to be rented rather than sold, will become a real option and we support increased initiatives. It is important to recognise that even in mature build-to-rent markets such as London, this only provides a single-digit percentage of accommodation and that the drivers for these projects are low vacancy rates and high incomes. A vibrant mum-and-dad investor market alongside multinational investors will be critical to future affordability.

It’s also important to see more consultation with the industry. No, really.

True consultation with industry and all stakeholders has been absent for some time and is leading to poorly informed decisions about the fundamental accommodation needs of Canberrans.

Reactive decisions which cater to vocal special interest groups are no way to run an important sector of the economy. Rates, land tax, stamp duty and other charges comprise much of the revenue that keeps our city operational and a great place to live. It is counter-intuitive to treat this sector as an afterthought in decision making.

Let’s deal with housing supply and affordability through collaboration, not confrontation. The real estate industry welcomes collaborative round table discussions with all stakeholders including government, housing associations, owners, tenants, agents, and lobby groups. Talk to the industry about outcomes and we will avoid policy achieving the opposite of its intentions. Decisions that impact the lives of homeowners and residents should not be combative. We all need win-win solutions ahead of political point-scoring.

That’s my list. If the next ACT Government commits to those simple ideas, we will improve opportunities for all Canberrans.

John Minns is the Managing Director of Independent. John has been an industry leader for over 30 years in the residential real estate market and has worked closely with industry, government and consumers on market-based solutions over that time.

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George Watling12:35 pm 18 Oct 20

The first thing that need to happen is a commitment from the government to stop using its monopoly power to make super profits from land sales. Land should be sold at cost price to keep prices down and micro block developments banned. https://www.canberratimes.com.au/story/6014812/act-land-sales-classic-monopolistic-behaviour-to-maximise-revenue/?fbclid=IwAR3LPj0WNsmBnjUVVWjButNHaEFANCIHhBN0RrdjgElVk_0gc2b7b_lCWp4

the property industry is not interested in having affordable housing. If house prices fall for whatever reason they just stop building, which creates a shortage and then prices go up again.

prices are ultimately set by demand and supply and all taxes are ultimately capitalised in the price of a house. Removing them would not ultimately change the actual price paid by the seller (currently a combination of house price +taxes like stamp duty) as the price of housing would rise by the amount of the tax reduction.

just do a little thought experiment and imagine we reduced the amount of taxes on property investors. this would make property investment more profitable (which is the aim). this would then attract more property investors into the market, creating greater competition at auctions and pushing up prices. this benefit goes straight into the pockets of existing owners and those wishing to sell, (and higher commission for real estate owners like independent) with higher prices paid by buyers and a loss of revenue for the ACT government. The property industry know this.

don’t even start me about the rest of the nonsense in the article.

to my mind what is really needed is a massive investment in social housing right across the city, the establishment of a not for profit housing associations specialising in high quality long term rentals (which are common across Europe and the US), a massive improvement in building standards and qualities, including investment into energy efficiency and perhaps most importantly of all release of land directly to buyers who will build on it immediately rather than builders who will bank it until prices go up.

HiddenDragon6:05 pm 14 Oct 20

Aside from the chronic problems with building standards, and patchy design standards, a major shake-up of the strata-management sector in this town could – if handled well and in the interests of residents/investors, rather than the sector – do a lot to improve housing choice and affordability.

“The most expensive housing policies are those that inhibit investment in housing. Prohibitive levels of rates and land tax, currently higher for investors than owner-occupiers, discourage investment in property. Reduced demand leads to a lack of rental supply. Low supply drives up rents and reduces affordability. We need to break this cycle.”

Not getting into the murky world of what rates/land tax levels should be, but the setting that investors pay more in this space is exactly as it should be. Housing should primarily be for shelter, not for investment returns – and policy settings should be broadly designed to ensure that as many people as possible can own their own homes.

The lack of rental supply argument would be irrelevant if there wasn’t a wide suite of policies, both at federal and state levels that overincentivise property investment over other types of investment. Some unwinding of some of those could go a long way to ensuring more people can actually own their own properties.

But that wouldn’t be in the interests of developers would it?

“Reactive decisions which cater to vocal special interest groups are no way to run an important sector of the economy”

Hmmm, vocal special interest groups hey?

Would that be like property industry spruikers wanting the government to change policies so they can make ever higher and more exorbitant profits?

If government’s ever enacted policies at a local and federal level to increase housing affordability and benefit everyone, it would pretty much be in the opposite direction of what’s suggested here.

Nah chewy, I’m with the OP on this. Applicants come up with a proposal, ensure it meets the guidelines etc, meet with ACTPLA et al, and submit it under the framework…
… but then, a “local residents” group of 5-10 people who are mostly semi-retired and want to enjoy their days in silence make noise and threaten political consequences, so the pollies jump in and subvert the approvals process. It happened with Manuka Oval in 2016 before the election, and is happening right now with the Fyshwick waste plant proposal.

How do I know this? Coz I used to be on the ISCCC, and I represented an entire suburb of residents. I know all about how 15 people claim to represent 1,500 but never really do.

The degree of influence “community” groups hold is frightening and damaging to our city.

If they talked about adequate regulation and wanting the government to follow proper process over listening to NIMBY or other lobby groups then I would agree.

But the vast majority of this article is actually just wanting policy changes that would conveniently make the property industry higher profits, whilst doing nothing to remove the opportunity of vest interest groups (like themselves) to significantly impact planning decisions.

Marea Fatseas4:46 pm 14 Oct 20

With respect to Manuka Oval, over 300 people were at a public meeting expressing opposition to the massive Grocon/GWS proposal. In the case of Fyshwick waste facility proposals, over 1,700 people have signed a petition opposing them so far. The ISCCC’s recent survey had over 500 responses from the inner south and the findings were similar to those of ACT government surveys based on responses from 1000 people For the whole of Canberra. So it is not credible to say that positions are based only the views of 15 people.

couldn’t agree with you more chewy14. I spend a large chunk of my life analysing policy and reading ‘reform’ proposals (and economic modelling). If I ever get a report on my desk the first thing I look at is the title and who has funded it. I then jot down on a piece of paper what I think the report will say. About 90% of the time I can predict precisely what the author will say before even reading the exec summary. (to be fair it doesn’t necessarily mean that any proposal is a bad one – just to remember that it isn’t objective)

I did that with this article and picked just about everything he was going to say, other than the need for more consultation with the property industry!

By your own admission you’ve had 1700 people oppose the Fyshwick proposal in a city of over 400000.

Whilst community input is important into policy directions and planning decisions, attempting to prevent legitimate projects that are following all proper processes by placing political pressure on governments should be opposed always.

Small NIMBY groups should not be allowed to dictate planning decisions in an open democracy.

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