John Alexander (Bennelong, Liberal Party) Share this | Hansard source

Before I start, I would like to say that while homelessness is obviously a serious concern, as the chair of the recent housing inquiry I will focus my comments on the home ownership elements of this debate.

Providing a stable housing market is one of the essential tasks of government. It is our duty as policymakers to ensure that the Sydney and Melbourne bubble does not burst the foundations of our nation's economy. The importance of housing and home ownership should have deeper consideration and exploration to gain a full understanding and appreciation of the benefits of home ownership. A median price of close to $1 million for a house in our nation's biggest city is unsustainable. And while some people benefit personally from the surge in property values, this is not good news for the broader economy and the next generation of prospective home buyers. Home ownership provides a greater level of security for families, leading to stronger and more engaged communities, a more stable workforce and the foundation for the creation of wealth, lifetime security and independence. Home ownership is the key to providing the pathway to an Australia of common wealth.

The home ownership inquiry that I chaired uncovered evidence of a disturbing trend, but if appropriate action is not taken dire consequences will result. Negative gearing has been a commonly used method for many to invest in property. Ideally it provides affordable rental housing for those who are unable to buy, with investors willing to operate their investment at a loss with the object to make a capital gain on sale. Previously these losses restricted investors to their capacity of funding these losses from other income. As interest rates came down, investors became more empowered as opportunities to neutrally or positively gear became a reality in many markets. This not only pushed up prices but also created a market dominated by investors, which led to the virtual exclusion of the first home buyer from the market.

Clearly something needs to be done; however, in a market as volatile and as sensitive as this one, it is vitally important that further changes happen incrementally. The stakes are too high for anything else. Labor's negative gearing policy would have created a crash the likes of which Australia has never seen. Investors currently account for about one-third of new lending for houses. The stampede for the exits by investors would, therefore, have removed one-third of the potential market for every property, slashing the prices of our family houses that are the basis of many people's wealth. We must do more to help first home buyers into the market.

What we need are more measured and calibrated proposals that help people enter the market without devaluing the homes that thousands of families pour all of their wealth into. Any changes must be finely calibrated and implemented incrementally to avoid destabilising our nation's biggest asset. APRA has already made changes in the past year that have slowed the levels of lending to investors by restricting borrowings on investment property to 80 per cent. This has had the desired effect of calming the investor driven heat. The RBA recently responded with a concern of an overcorrection in major markets by reducing interest rates, citing a concern of a possible crash in major markets. Both of these regulators have acted with a great deal of consideration and concern for the strength of the market—our biggest asset class—and to have stabilising effects, effectively a counterbalancing of demand by investors and the concerns of those wishing to buy a house.

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