Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The state of the housing market is important to many constituents of my electorate of Moore, which is located in Perth's northern suburbs in an area which is home to many established family houses and a significant population of retirees as well as being on the periphery of Perth's rapidly growing outer metropolitan area, which is the domain for many first home buyers. Indeed, the housing market is important to most families across Australia, who are carefully monitoring the policy direction of the government. Many homes in the suburbs are currently listed for sale on the market, with vendors facing anxious times and many professionals depending on the real estate industry to earn their livelihoods. On the one hand, a home represents the most significant financial asset for most people and is the product of a lifetime of saving and making mortgage repayments. It represents a significant proportion of the household wealth. Yet, on the other hand, housing affordability is an issue for many young Australians seeking to enter the housing market.

The challenge for the government is to implement sensible policies to ensure stability in the market with steady growth whilst maintaining housing affordability for the next generation of Australians through an increase in the supply of housing stock. Disciplined fiscal management, ensuring that wage growth is matched by productivity growth, helps keep inflation under control, which in turn takes pressure off interest rates. Maintaining low interest rates in this environment is important to ensure housing affordability for millions of Australians paying off their mortgages in our suburbs.

Members would be aware that in Western Australia the property market has cooled significantly following a downturn in the state's mining industry, with housing prices relatively weaker than in the eastern states. A number of families in my electorate and beyond are facing financial hardship and the prospect of negative equity in their homes. Housing affordability policies intended for the eastern states' property market must not disproportionately affect Western Australia's housing.

I'm concerned that Labor announced it would tighten both negative gearing and the capital gains tax discount, saving $565 million over the forward estimates and $32.1 billion over a decade. This policy measure will potentially affect housing supply and negatively impact average Australians by risking the value of their biggest asset. It will likely reduce the volume of new housing construction and raise rental prices. I refer to a report by RiskWise Property Research and WargentAdvisory which models the impact of Labor's proposed winding back of negative gearing and capital gains tax concessions. The report is a detailed study of how the proposed measures would affect housing prices of 84 local government areas. It finds that impacts would vary markedly around the country, with prices in Western Australia projected to climb by up to seven per cent. Modelling by the firms suggests that changes would be equivalent to a sudden 1.15-percentage-point hike in interest rates, or the equivalent of more than four Reserve Bank of Australia rate hikes. For many borrowers, it would be equivalent to an increase in repayments of more than 20 per cent.

On 8 January 2018, Treasury released a report saying that Labor's proposal for negative gearing would have little impact on housing prices. However, the analysis struck a note of caution that the policy could put some downward pressure on housing prices in the short term if its introduction coincided with the weaker housing market. A number of recent developments in the housing market must be taken into account, including local factors such as lower rates of unit development, a slowdown in construction, recent price falls, the recent regulatory crackdown on investor borrowing, a reduction in demand from offshore buyers, particularly from China, and concerns of a credit squeeze in the wake of the banking royal commission.

In conclusion, the coalition's policy of maintaining the status quo on negative gearing and the 50 per cent capital gains tax discount on assets held for more than a year will help maintain the stability of the property market. Maintaining a low-inflation and low-interest-rate environment will promote greater access and affordability for new homebuyers entering the housing market.

House adjourned at 19:59