Why housing affordability is a political no – go zone

Why housing affordability is a political no – go zone

When Malcolm Turnbull addressed the National Press Club this week I was really hoping that he was going to announce some major policy critiquing for all matters pertaining to Australia’s ongoing housing affordability woes. Sadly, very little was offered where he clearly laid the blame at the states and territories which simply identified that very little would be happening to this space.

We can then expect political huffing and puffing until November 2, 2019 which is when Australia must contest the next election. A very strong possibility that we will see a changing of the guard where negative gearing laws will be changed which will then probably coincide with a major property downturn. On that basis, it is clear to predict the game plan for the next two and a half years. Property investors will go -hard simply because they want to get in before the negative gearing rules are changed (should there be a change in government.)

There is no doubt that property prices will continue to rise in 2017 to the extent that we may well see the cumulative house prices reach 100 per cent gains in five years in some areas. The latest statistics from CoreLogic revealed this week, identified the January price rise results showed Melbourne up an additional 11.8 per cent and Sydney continues to run amok at 16 per cent. Since June 2012, the cumulative increase in house prices has been 70.5 per cent, CoreLogic reported.

Two things I was expecting announcements on this week were immigration and reducing the off – the – plan ratios to overseas buyers. CBA senior economist Michael Workman said, ‘’housing affordability is set to worsen without federal action. The Federal Government controls some of the significant demand factors for housing markets, namely population growth via migration and the spectrum of tax and foreign investment policies that significantly inflate demand for existing and new housing. Housing affordability can be improved, via stabilising growth in house prices and rents, by gradual reforms to both supply and demand issues.”

In the present property environment, there is no need for off – the – plan sales to foreign buyers to remain at 100 per cent and this ratio is controlled by the Turnbull government.

Despite the construction of thousands of new apartments, we are not seeing an easing of rents as was the expected case. Data analysis from the NSW Rental Bond Board identified that NSW has more tenants than ever before. No surprises to learn that the most expensive five suburbs are Manly, Waverly, Woollahra, Willoughby and Mosman. We can therefore expect to see these areas hot – spotting with investors as they know these areas provide the best rental returns as well as capital appreciation. Investors will keep driving these markets simply because the federal government has tinkered with superannuation, and property markets are out-performing the share market.

Of course, we all know that this will change over time although the momentum is much stronger with our respective governments doing absolutely nothing aside from weekly lip service.

With much being written about money laundering within the Australian property markets the appointed watchdog, the Australian Transaction Reports and Analysis Centre (AUSTRAC), is investigating more than $3 billion in suspicious transfers from Chinese property investors last year. This was further backed – up late last year when the major Australian lenders ceased lending to foreign buyers amid concerns. I was then surprised to read this week that foreign investors are again on the surge where this time they are paying cash to settle the full amount of the purchase. Now many will be asking the obvious questions as to where all these monies are originating from based on recent announcements that the Chinese government had shut down money transfers from China?

Well, allow me to lay your concerns to rest – the smartest thing that Joe Hockey did when he was treasurer was to hand all data collection on every property transfer in Australia over to the Australian Taxation Office (ATO). You may have forgotten that some months later after reviewing the respective data an excited ATO announced that they were expanding their forensic property investigations back to 1985.

Just this week, I received a telephone call from one of the ATO investigators requesting purchaser contact information for a property we sold late last year. Nothing was said, I simply adhered to their request and provided the relevant information.

What this clearly tells us, is that every property transaction is scrutineered by the ATO and you can no longer beat the system.

With so many discussions on housing affordability this is one announcement that should please all those closely following the real estate movements. As each property settles all the data is then sent to the ATO for recording and investigation.

It has become very clear that everybody buying Australian real estate should know that each transaction is noted and investigated. And yes, they have the resources.

MOSMAN – 2088

Number of houses on the market this time last year – 50

Number of houses on the market last week – 25

Number of houses on the market this week – 39

Number of apartments on the market this time last year – 43

Number of apartments on the market last week – 21

Number of apartments on the market this week – 31

CREMORNE – 2090

Number of houses on the market this time last year – 15

Number of houses on the market last week – 6

Number of houses on the market this week – 10

Number of apartments on the market this time last year – 19

Number of apartments on the market last week – 8

Number of apartments on the market this week – 15

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 6

Number of houses on the market last week – 0

Number of houses on the market this week – 0

Number of apartments on the market this time last year – 27

Number of apartments on the market last week – 12

Number of apartments on the market this week – 10

Source: pricefinder

3 Responses to “Why housing affordability is a political no – go zone”

  • Dave says:

    Great analysis as always. If only I could believe we could have a government on either side that would do something about it!

  • Informative as always. Looking forward to more.
    Roger

  • Paul Stuart says:

    Your regular articles are very good, but I must qualify the preoccupation with affordability, particularly in Sydney.
    Undoubtedly, Sydney property price growth has exceeded Melb, Bris and Perth in the past 3-4 years. It must be noted that Bloomberg yesterday quoted ABS data on median capital city prices over the 13 years 2003 to 2016. This period of time is important because it neutralises the pre-GFC boom, the post GFC slump and most other short term issues in the 4 cities.
    Sydney was the worst performer by far from 2003 to 2012, and the best from 2012 to 2016. Sydney was lacklustre for many years.
    But, over the 13 years 2003-2016, Sydney was significantly the worst performer of the 4 largest cities. This means Sydney was MORE affordable in 2016 than in 2003 versus the other 3 cities.

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