The affordability of housing in Australia is a hot topic and one that has been discussed heavily recently. The issue at hand is maintaining a balance of real estate supply and demand in order to keep housing prices stable. Without this balance, we could see a rise in housing prices and this is the concern in Melbourne at the moment.
The latest policy announcement by the Victorian Government, ‘Home for Victorians’ sees the first home owner grant doubled for purchases in regional areas of Victoria and stamp duty for eligible first home buyers waived. Investors, on the other hand, have been handed a blow with the removal of stamp duty concessions for ‘off the plan’ investment purchases.
Although this policy has delivered encouraging news for some of Victoria’s first home buyers, it is a disincentive for investors. The sentiment in the Victorian property industry at the moment is of caution as they explain that discouraging investors and developers will only reduce the number of new developments and rental properties on the market, effectively reducing the supply, which will increase the demand for existing properties. Inevitably, more people having less property options forces house prices up.
Instead, the Victorian executive director of the Property Council Of Australia, Sally Capp and the Victorian chief executive of Urban Development Institute Of Australia, Danni Addison both suggest improvements to the current planning and development system in Victoria are required. These changes will make the approval process more efficient and in doing so, make it easier for developers to get their properties on the market and available to buyers, the success of which can be seen in Queensland.
“Policy that enables the development industry to deliver the homes that Melburnians want and need is key to the Victorian Government’s housing affordability objectives.”
“At a time when the pressure is on to deliver new housing stock, we need measures that encourage supply — that’s what will help affordability beyond the short-term.”
Danni Addison Urban Development Institute of Australia chief executive
The Victorian State Planning Minister, Richard Wynne, said the Victorian Government had agreed to planning reforms to the tune of $58 million which will go a long way to streamline the approval process.
A recent State of the Land Report found that supply of new lots increased nationally in 2016 with the release of over 57,000 new lots, Melbourne seeing almost 40% of this. This goes some way to show the demand for property in Melbourne and it shows no sign of slowing. The report also found that lot sizes have further decreased in Melbourne to an average of 400m2, to facilitate affordability. Without this decrease in lot size the median lot price was estimated to be approximately $10, 000 more per lot.
So, with some parties being handed a win it is always the way that others may lose out, but at what cost? Positive or negative, this policy will have an impact on the housing market and the affordability of housing across the state.
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