Australia faces chronic housing shortage
An ‘ABC News’ video uncovers a few dirty linens kept in the closet of local and state governments. Australia is suffering from a chronic housing shortage according to the video. Each year an average of about 200,000 new homes are needed, yet only about 150,000 are being built.
This shortfall of 50,000 can be a deep rut to fill, given that the Australian population is expected to reach 36 million by 2050.
Why is the local and state government to blame?
Property taxes constitute about 45% of government revenue and hence we find many unwarranted property taxes thrust on the home buyers. As an aside, the property transaction costs are 14%.
While the figure of 14% could be unforgivable for a developing nation like China or India, it is an unpardonable sin for a developed country like Australia.
The local and state government has also been heightening the corporate taxes since the year 2002. Presently, it stands at 10%.
Banks are not willing to lend despite low interest rates
Apart from this, the builders are also finding it difficult to cope with the high compliance costs and banks’ lack of appetite towards lending. This is quite an irony given that low interest rates are aimed to facilitate lending in the first place.
Buyers in 25-34 age range are finding it difficult to buy property
Moderate income households are in need of government assistance. Those who are looking for low cost housing will be served well by government initiatives like the new home grant scheme.
It is quite startling statistic that people in the age group 25-34 are finding it increasingly tough to buy homes.
Superannuation money being diverted towards share purchases
Superannuation money could sincerely help the cause but a large chunk of it is going towards purchasing Australian and global shares. As a result, fixed income asset classes are only getting a secondary glance. Rather unfortunate!
Here is the video:
https://youtu.be/rbLSc0thSVY
The Australian population is only expected to grow from here. There is no stopping the overseas migration (not even the Federal Budget labour reforms).
Thankfully, a part of that labour set will also comprise of skilled workers in the construction sector. With some good fortune, the builders will tide over the skill shortage then.
Also, I feel that the government grants, whose arc has been changed from “all kinds of homes” to “new homes” should be re-altered to help those FHBs who want to buy existing (established) property.
