Bass Coast: Ordinary working people are being priced out of their own community.
By Terry Burke
AFTER more than 40 years studying housing policy, I've seen few issues generate as much heat and misinformation as the proposed changes to the tax regime around housing. From where I sit in Bass Coast, the real issue is much simpler: will the changes help ordinary people find a place to live in their own community?
Imagine you're a nurse offered a job at Wonthaggi Hospital, a teacher appointed to Bass Coast Secondary College, or a young tradesperson who grew up in Inverloch. You earn a decent wage but after months of searching you still can't find an affordable home to rent, let alone buy.
AFTER more than 40 years studying housing policy, I've seen few issues generate as much heat and misinformation as the proposed changes to the tax regime around housing. From where I sit in Bass Coast, the real issue is much simpler: will the changes help ordinary people find a place to live in their own community?
Imagine you're a nurse offered a job at Wonthaggi Hospital, a teacher appointed to Bass Coast Secondary College, or a young tradesperson who grew up in Inverloch. You earn a decent wage but after months of searching you still can't find an affordable home to rent, let alone buy.
For many Bass Coast residents, that's the reality. As the Bass Coast Housing Strategy points out, rent and house price increases on the coast over the past decade have been some of the highest in Victoria, meaning younger people lose the opportunity to become owners, renters face increasing housing stress and key workers – often drive-in, drive-out health care and education professionals – can’t find accommodation.
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Bass Coast, like the rest of Australia, has been experiencing a housing crisis that has worsened year by year. A major reason is the tax system that has supercharged investment in property, driving up prices and rents with first home buyers and renters paying the cost.
Coastal areas with high attractiveness have disproportionate housing problems. Assisted by the existing tax system, more and more accommodation has become short term holiday accommodation and investors are buying up existing property and outbidding first home buyers. |
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The good news is that for the first time in decades a budget has been designed to bring about fairer and more affordable housing. The bad news is that those with a vested interest in continuing house price and rental inflation property have been able to create a scare campaign to portray the tax changes as a negative for all Australians.
The scare campaign is based on falsehoods and misunderstandings. The current tax regime enables investors to claim the loss on investing in a property against other taxable income. The 50 per cent capital gains tax discount means they pay half as much tax on the profit they make from selling a house as working people pay on their wages.
The scare campaign is based on falsehoods and misunderstandings. The current tax regime enables investors to claim the loss on investing in a property against other taxable income. The 50 per cent capital gains tax discount means they pay half as much tax on the profit they make from selling a house as working people pay on their wages.
If our children, grandchildren, nurses, teachers and hospitality workers can’t afford to live in the communities they serve, then we have to ask who the housing market is actually working for. |
It gives them a massive advantage in the housing market. But every time an investor outbids a first-home buyer for an existing house there is a face behind that statistic. If our children, grandchildren, nurses, teachers and hospitality workers can’t afford to live in the communities they serve, then we have to ask who the housing market is actually working for.
The removal of negative gearing and changes to the capital gains tax don’t discriminate against investors. Instead they will pay a tax rate closer to what ordinary wage and salary earners pay. Most people would think that was fair.
The removal of negative gearing and changes to the capital gains tax don’t discriminate against investors. Instead they will pay a tax rate closer to what ordinary wage and salary earners pay. Most people would think that was fair.
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The current tax regime has been grandfathered for existing investors, and investors in new dwellings can still negatively gear. In the case of Bass Coast, this hopefully means more investment in new construction, thus increasing housing supply and at the same time reducing investor demand for existing properties.
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There is no substance to the arguments that investors will flee the market; most existing landlords will stay in the sector to protect their negative gearing rights. Even if some do leave is that a negative or a positive? The dwelling is still there and will be bought by a home purchaser, increasing ownership opportunities, or another landlord.
What is likely to happen as a result of the tax changes, reinforced by high interest rates and international uncertainly, is that Bass Coast house prices and rents may fall slightly and, relative to the past, stabilise for the next few years.
Isn’t this exactly what we want? For our younger households to have the housing opportunities of their parents, for renters to be less stressed, and for home hunters to have more housing choices.
I'd like to see an end to the destructive politicising of the housing crisis - let's have bi-partisan solutions.
Meanwhile, Bass Coast residents who want house prices to continue to rise need to ask themselves some hard questions. What sort of housing futures do they want for their children, for their neighbours?
Terry Burke is Emeritus Professor of Housing studies at Swinburne University and a member of Housing Matters Bass Coast
What is likely to happen as a result of the tax changes, reinforced by high interest rates and international uncertainly, is that Bass Coast house prices and rents may fall slightly and, relative to the past, stabilise for the next few years.
Isn’t this exactly what we want? For our younger households to have the housing opportunities of their parents, for renters to be less stressed, and for home hunters to have more housing choices.
I'd like to see an end to the destructive politicising of the housing crisis - let's have bi-partisan solutions.
Meanwhile, Bass Coast residents who want house prices to continue to rise need to ask themselves some hard questions. What sort of housing futures do they want for their children, for their neighbours?
Terry Burke is Emeritus Professor of Housing studies at Swinburne University and a member of Housing Matters Bass Coast
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