Thursday, 9 February 2017
In many of our capital cities and surrounding regions, home ownership is a pipedream for young Australians. Home ownership is declining, while the number of Australians in rental accommodation is increasing. According to a recent report by CoreLogic, the largest property data and analytics company in the world, addressing the issue of housing affordability is a complex task, which is multidimensional, multi-disciplinary and requires the cooperation of local, state and federal governments, as well as the private sector.
CoreLogic's December 2016 report identifies a range of issues affecting housing affordability, including: a disproportionate level of investment in housing, low interest rates, shallow returns from bonds and cash, and high volatility across equity in the commodity markets. This has resulted in increased investment demand in housing. We also see high transaction costs, expensive stamp duty, a lack of decentralisation in major working centres, reduced affordability around city centres and insufficient transport linkages to outlying, greenfield housing locations. CoreLogic have identified that range of issues as ones that lead to a complex problem that needs complex solutions. Simply doing what the coalition has said would fix the problem, and that is to increase supply and move away from your job and your relatives and your friends to regional New South Wales or regional areas across the country, is an absolute nonsense.
CoreLogic have utilised four measures in their report: the ratio of dwelling prices to annual household income, the proportion of household income required for a 20 per cent deposit, the proportion of household income required to service an 80 per cent loan and the proportion of income required to pay the rent. In Sydney, the median dwelling price was $785,000, compared to $525,000 five years ago. The median annual household income is $93,593, compared to $75,088 five years ago. The dwelling price-to-income ratio has increased from seven to 8.4 in five years. The percentage of annual household income required for a 20 per cent deposit has increased from 140 per cent to 168 per cent over five years. This equates to $157,000, or 168 per cent of the annual household income. This is the key factor in stopping young Australians from accessing housing in this country.
We were told by the Deputy Prime Minister, Barnaby Joyce, that if you go to regional New South Wales everything will be okay. In regional New South Wales, a 20 per cent deposit on the median-priced dwelling now costs $81,000, equating to 133 per cent of the annual household income. What you have to understand is that the median annual household income in regional New South Wales is much less than in metropolitan Sydney, which, as I indicated earlier, is $93,593. But in regional New South Wales it is $60,959. So when you move to regional New South Wales, if you can find a job, the median income from that job is massively reduced compared to that in Sydney.
The Deputy Prime Minister's simplistic solution to the housing crisis is that everyone moves to the regions for affordable housing. If only it were that simple. You would still need to pay 35.2 per cent of your annual income to service an 80 per cent LVR loan. If you are renting in regional New South Wales, the percentage of annual household income required to pay the rent is 29.9 per cent, compared to 20.9 per cent in Sydney. So, actually, the percentage of your income required for rent in regional New South Wales is higher than in Sydney.
The lower median annual household income, the lack of jobs and the fact that Australians living in rural and remote areas tend to have lower life expectancy, higher rates of disease and injury, and poor access to the use of health services than people living in major cities also has to be factored in. In addition, NAPLAN results show that kids in regional areas are way behind children in metropolitan areas, with 2.6 per cent of kids below the national minimum standard for year 3 reading, compared to 4.5 per cent of kids in regional areas. This increases to 12.4 per cent for kids in remote areas and a shocking 36.4 per cent for kids in very remote areas. The $30 billion the Turnbull government is cutting from needs-based school funds means that many regional schools with high levels of disadvantage will never receive the money they need to help these kids catch up. This is the reality behind the glib, simplistic rhetoric of the Deputy Prime Minister.
Labor understands—as does CoreLogic—that this is a complex issue. We have said that, to ensure that there is a fair go, we need to deal with capital gains tax and negative gearing. In fact, the latest statistics from the ABS show that investors comprise 47 per cent of mortgage demand. Investors account for more than 55 per cent of mortgage demand across the New South Wales market. Fifty-five per cent of the loans going out are to investors, and that is why you have to deal with capital gains tax and negative gearing.
We know that the Treasurer has headed off to the UK to have a look at bond aggregators. Labor is not opposed to a bond aggregator. We have looked at bond aggregators. We think that they can help build social housing across the country, but we also believe that the National Rental Affordability Scheme that this government cut was one of the best schemes ever for increasing the amount of affordable social housing in areas where workers needed to be and where families could not afford to live. The NRAS was a good scheme.
We need to look at long-term transparency and accountability within the national partnership agreement on homelessness, and we need NAHA to help transparency, accountability and growth. We also need to look, as I have been advised around the country, at inclusionary zoning that is being practised in the UK. Where developers are building in London, 50 per cent of the build has to go to social housing or some alternative payment to allow social housing to be developed. These are absolutely essential issues that are not being done here. Older women and young people coming out of care are more and more going into homelessness and positions of hopelessness.
Rental security, uniform tenancy standards—these are all issues that need to be looked at if we are looking at how we deal with rental and housing affordability. The position the government has adopted is simplistic, it is absolutely stupid and it will not solve the problem for young people who cannot access the market.
Senate adjourned at 18:40