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Zed vows to make housing more affordable

By johnboy 20 September 2011 26

Liberal Leader Zed Seselja has announced that if elected he’s going to fix the horrible state of housing affordability in Canberra:

“We already know Canberra is one of the most expensive housing markets in the country, second only to Sydney. It now takes 6.2 times the annual average income to afford an average-priced home.

“This figure is almost double what it was when ACT Labor took office in 2001.

“Canberra’s affordable housing crisis has come about due to restricted land supply, a broken planning system, poor infrastructure delivery, high taxes and a lack of competition.

“That’s why the Canberra Liberals have policies for addressing these issues. These would include a genuine land bank, which would have a pool of land ready to release, with regard to changes in the market.

“Through our Infrastructure Canberra Bill, the Canberra Liberals would also establish an independent infrastructure commissioner backed by an industry board to ensure that infrastructure is delivered in a more timely and targeted manner.

“The housing crisis created by this government is of great concern the Canberra Liberals, and we will take all reasonable steps to improve the situation,” Mr Seselja concluded.

While we wonder just how effective these measures will be we do have to wonder; as there’s nothing there about raising incomes is it Liberal policy to reduce the value of real estate in Canberra?

That would be courageous.


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Zed vows to make housing more affordable
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essfer 1:05 pm 26 Sep 11

rosscoact said :

essfer said :

BOHICA.

We can all piss and moan about this until we’re blue in the face. Jon won’t do anything about it, and Zed is nothing but empty words with no policy.

The best we can do is find a way to manage with the cards that they’ve dealt us. I’m not happy about it, especially as I am still battling the over-inflated rental costs in Canberra, but you know what, no amount of whinging is going to change it; so I repeat: BOHICA.

I think you’ll find that the current chief minister is not Jon Stanhope (unless you are talking about a compeltely different Jon)

Indeed. While the face changed the sh*t still smells the same to me. But of course that wasn’t my reasoning, I just made a mistake.

rosscoact 12:55 pm 26 Sep 11

essfer said :

BOHICA.

We can all piss and moan about this until we’re blue in the face. Jon won’t do anything about it, and Zed is nothing but empty words with no policy.

The best we can do is find a way to manage with the cards that they’ve dealt us. I’m not happy about it, especially as I am still battling the over-inflated rental costs in Canberra, but you know what, no amount of whinging is going to change it; so I repeat: BOHICA.

I think you’ll find that the current chief minister is not Jon Stanhope (unless you are talking about a compeltely different Jon)

essfer 11:59 am 26 Sep 11

BOHICA.

We can all piss and moan about this until we’re blue in the face. Jon won’t do anything about it, and Zed is nothing but empty words with no policy.

The best we can do is find a way to manage with the cards that they’ve dealt us. I’m not happy about it, especially as I am still battling the over-inflated rental costs in Canberra, but you know what, no amount of whinging is going to change it; so I repeat: BOHICA.

dpm 8:27 am 21 Sep 11

Cool! So Zed is going to get rid of stamp duty and lower UVs, thus lowering land prices and ongoing rates! Thanks Zed! Looking forward to it…. Bahahahaha!

It’s so true that the govt relies on this for a large chuck of its income. Just look at how UVs magically doubled between 2002 and 2004. You can picture the MLA meeting: ‘We need more money… Hey, lets grossly inflate land value so we cash in everywhere!’ Pity they didn’t think of the ongoing effects this would have on housing affordablility, especially when you add developer profit taking into the mix.

Watson 7:39 am 21 Sep 11

yellowsnow said :

Watson said :

Which is what the current Labor govt is trying to do with the Affordable Housing scheme. I cannot remember the percentage though (and am way too lazy to look for it right now), but it’s less than 20% of properties in all new developments that have to be sold under a certain amount (currently set at $328,000). It’s not much maybe but it is better than nothing. It is the only way some low income families are able to afford buying a house.

I agree this is one of the only effective affordability schemes i’ve come across, anywhere in Australia – Labor govt should be talking more about its successes in this area – there certainly isn’t much more to gloat about! Perhaps they don’t because they know, deep down, that the program has huge problems with compliance. Anecdotally I’ve heard the program is being rorted to high heaven, partly by developers (they ‘recruit’ low income families to pose as buyers etc,), but also by first home buyers who say they’re struggling but actually either work in the black economy with undeclared incomes, or who have just returned from working overseas. I know a few couples who came back from a few years working in London or Dubai on incomes well over $100,000 per year (because money was made OS they’re classed as having nil or negligible income back in Australia, and thus eligible for various forms of support!), buy one of these places at bargain basement prices and with no stamp duty, then a year later rent it out or sell it on, reaping a huge profit. Still, despite the problems there are some benefits to the scheme

The land rent scheme on the other hand is a total sham. Since they lifted means testing on the scheme, I’ve heard of people on huge incomes, who already own $500k homes, talk of using the scheme to rent some land and then build huge, modern houses worth over $600k even without the land. The taxpayer would effectively be subsidising people to upsize to these huge, expensive homes, as govt would be losing income on foregone sale of land (rent paid would not add up land value for 25 years) but would still need to pay for infrastructure up front.

But that is a problem you are going to get with any income-tested scheme? And don’t you have to declare foreign income on your tax return anyway? Though actually, I cannot remember being asked for proof of income when I bought my affordable house! But I might have forgotten as my brain freezes when solicitors start talking in legal and financial lingo.

Also, the stamp duty concession is a completely separate process. Again, the tax evaders can rort it just like they could rort any other income tested scheme.

The land rent scheme has been a flop mainly because most people think it’s a really bad investment. The new house may go up in value for the first few years – as building costs rise – but then it just decreases in value after that. In the meantime your land rent goes up as the land value rises and you are not gaining anything from that rise. I thought about it. I concluded it was slightly better than renting but only because you wouldn’t have to deal with landlords and couldn’t get kicked out. But the mortgage for the house would make it considerably more expensive than renting which means I wouldn’t have been able to save up for the deposit and the extra loan to buy the land. Add to that the fact that only 1 financial institution is willing to give you a mortgage for it and it is clear that financially it just doesn’t make any sense for first home buyers.

Not sure if it’s true that the government loses money on it though. I think the land rent is 5% of the value? That seems like a good return for land that they still own. And they are always going to have to spend on the infrastructure. In this case they just do it before they sell the land, but eventually most of that land will be sold and they will get that money back. But I could be overlooking something here.

gazmant 10:40 pm 20 Sep 11

yellowsnow said :

I forgot to mention that the one government intervention that will make Canberra real estate cheaper is if the Abbott Government cuts 12,000 public servants. Prices will plummet, like in 1996 — problem solved. What will Zed spend his days worrying about then? Counting donations from developers?

+1

yellowsnow 10:02 pm 20 Sep 11

Watson said :

Which is what the current Labor govt is trying to do with the Affordable Housing scheme. I cannot remember the percentage though (and am way too lazy to look for it right now), but it’s less than 20% of properties in all new developments that have to be sold under a certain amount (currently set at $328,000). It’s not much maybe but it is better than nothing. It is the only way some low income families are able to afford buying a house.

I agree this is one of the only effective affordability schemes i’ve come across, anywhere in Australia – Labor govt should be talking more about its successes in this area – there certainly isn’t much more to gloat about! Perhaps they don’t because they know, deep down, that the program has huge problems with compliance. Anecdotally I’ve heard the program is being rorted to high heaven, partly by developers (they ‘recruit’ low income families to pose as buyers etc,), but also by first home buyers who say they’re struggling but actually either work in the black economy with undeclared incomes, or who have just returned from working overseas. I know a few couples who came back from a few years working in London or Dubai on incomes well over $100,000 per year (because money was made OS they’re classed as having nil or negligible income back in Australia, and thus eligible for various forms of support!), buy one of these places at bargain basement prices and with no stamp duty, then a year later rent it out or sell it on, reaping a huge profit. Still, despite the problems there are some benefits to the scheme

The land rent scheme on the other hand is a total sham. Since they lifted means testing on the scheme, I’ve heard of people on huge incomes, who already own $500k homes, talk of using the scheme to rent some land and then build huge, modern houses worth over $600k even without the land. The taxpayer would effectively be subsidising people to upsize to these huge, expensive homes, as govt would be losing income on foregone sale of land (rent paid would not add up land value for 25 years) but would still need to pay for infrastructure up front.

Thumper 8:44 pm 20 Sep 11

Interesting, Seselja says he’d like to do something about overinflated housing prices in Canberra and he gets criticised left, right and centre.

And yet the Stanhope/ Gallagher mafiosi is happy to let it drift along as it has always been.

I don’t think Seselja has the answers but, as I said, interesting.

Watson 8:29 pm 20 Sep 11

yellowsnow said :

If Zed really cared, he’d force developers to build only townhouses and apartments rather than larger homes. This would increase supply at the bottom rather than the middle and top of the market, which is what is needed.

Which is what the current Labor govt is trying to do with the Affordable Housing scheme. I cannot remember the percentage though (and am way too lazy to look for it right now), but it’s less than 20% of properties in all new developments that have to be sold under a certain amount (currently set at $328,000). It’s not much maybe but it is better than nothing. It is the only way some low income families are able to afford buying a house.

wildturkeycanoe 8:23 pm 20 Sep 11

Zed said – “Canberra’s affordable housing crisis has come about due to restricted land supply, a broken planning system, poor infrastructure delivery, high taxes and a lack of competition.”
1. Restricted land supply – So, is he going to have a takeover of N.S.W to solve this problem, or attack the Greens and use some of the protected reserves for development? Can’t see a solution here.
2. The planning system in Canberra is pretty much controlled by developers anyway, so not much you can do about it.
3. Poor infrastructure delivery – Blame it on Transact, Telstra, Transact, ACTEWAGL and whatever is left of private enterprise. Too much government control already.
4. High taxes – well, if the land values fall, where are they [the government] going to get their money from???
5. Lack of competition – considering how hard it is to get any trades compliance/licensing/approvals across the board because of the planning authority monopoly, the only solution is to do it dodgy or get cheap labor [therefore lowering the already average income].
As for the bit after “Through our Infrastructure Canberra Bill,” – it was just waffle, waffle, waffle.
You need something more concrete Zed.

chewy14 7:20 pm 20 Sep 11

what_the said :

Exactly, the only way to bring it down is to distort the market and introduce extremely low cost housing, which will drag the whole market down and lose votes with it. High prices are here to stay, the best you can hope for is that it plateaus for the next 10 years.

Distort the market?
Bahahahahaha.
No, a government that relies on the income generated by land sales would never do that, would they?
I think its time that some people realise that artificially generated high prices are not the norm. Unfortunately self-interest rules.

wycx 7:00 pm 20 Sep 11

Perhaps Zed has had a chat to Tony about repealing negative gearing and capital gains tax concessions for housing?

Deref 6:08 pm 20 Sep 11

Tch, You’re all cynics! I’m absolutely certain that this would immediately reduce the cost of housing by precisely the value of a politician’s promises.

yellowsnow 4:56 pm 20 Sep 11

arescarti42 said :

This is the problem, we don’t actually have a functioning property market in Canberra (or any other Australian city as far as I’m aware).

A shitty 400m^2 block on the city fringe should not cost $300k, the competitive market price of that land is probably $50-70K.

However the ACT government has two big incentives to try and keep prices high by operating non-responsive land release policies.

1. They rely on land sales for a considerable proportion of their budget.
2. The majority of voters own land and have benefited from increases in its price.

+1

only i’m not sure market value is lower than what govt is charging. Look at how much land is going for on NSW side of border, and also in Sydney. In these cases it’s not the government selling the land but private owners/developers, yet still they charge a similar price. The market price is whatever the market is willing to pay for it, and there seems to be no shortage of takers at the current prices (so far anyway — though i expect there’ll be an oversupply eventually, and a price slump)

of course the govt could always sell land at below market discount rates if it really wanted to make land affordable — but that as you say would lead to revenue shortfalls, as well as political/equity issues. The govt would be seen to be effectively subsidising McMcMansion owners while significantly depreciating the value of existing real estate. Any government that did that probably wouldn’t survive the next election (though with Zed as opposition leader they might)

Bluey 4:24 pm 20 Sep 11

yellowsnow said :

I forgot to mention that the one government intervention that will make Canberra real estate cheaper is if the Abbott Government cuts 12,000 public servants. Prices will plummet, like in 1996 — problem solved. What will Zed spend his days worrying about then? Counting donations from developers?

Thats a big IF and we’re two years away from a Federal election anyway.

MrMagoo 3:56 pm 20 Sep 11

Well for once the Liberal sabre rattling and clenched fist beating upon the metaphoric table top is accompanied by some ‘policy’ in support. As has been my want for a while to see the current opposition actually respond with anything more than gnashed teeth and furrowed brow. However, JB in his post is rather too correct, what say the Canberra Liberals on current land values and salaries within the ACT?

arescarti42 3:44 pm 20 Sep 11

what_the said :

High prices are here to stay, the best you can hope for is that it plateaus for the next 10 years.

Best you can hope for if you’re landholder/homeowner maybe.

arescarti42 3:43 pm 20 Sep 11

yellowsnow said :

I don’t think any policy response on affordability has ever worked before, so the govt might as well stay out if and let the market deal with it.

This is the problem, we don’t actually have a functioning property market in Canberra (or any other Australian city as far as I’m aware).

A shitty 400m^2 block on the city fringe should not cost $300k, the competitive market price of that land is probably $50-70K.

However the ACT government has two big incentives to try and keep prices high by operating non-responsive land release policies.

1. They rely on land sales for a considerable proportion of their budget.
2. The majority of voters own land and have benefited from increases in its price.

yellowsnow 2:15 pm 20 Sep 11

I forgot to mention that the one government intervention that will make Canberra real estate cheaper is if the Abbott Government cuts 12,000 public servants. Prices will plummet, like in 1996 — problem solved. What will Zed spend his days worrying about then? Counting donations from developers?

Bluey 2:13 pm 20 Sep 11

Doc Dogg said :

If you built a suburb of low-cost, poorly serviced housing that only accommodated those people who were truly on low incomes it could be done. It would basically be a segregated community that would be independently priced from the surrounding housing because no one would “choose” to live there.

So relocate everyone from the flats on northbourne to this place and sell the premium land on northbourne to pay for it.

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