Australia real inflation is hidden in housing. No political party has the will for positive enduring change as they and their economic model (wealth effect) are vested in the status quo.
The below are suggestion for discussion, all will have winners and losers depending on which side of the fence you are on (vested (have a home/investments in property) or unvested dream of affordable shelter and stability)
1) Remove capital gains tax concession on residential property.
2) Prohibit company and trust ownership of residential property and potential residential vacant land (Including real estate investment trusts etc.), allow 5 years to comply. Commercial property unrestricted.
3) Reduce immigration to maintain current population for 10 years.
4) Remove all Government first home grants, deposit guarantees, etc.(including proposed Gov proposed shared equity schemes. (Ensuring Gov policy will NOT be influenced by their own investment). Tax payer funded policies always result in increased prices, ALWAYS.
5) Crown land release and rezone suitable rural /regional land. Decrease council development applications and subdivision cost by at least 80%.
6) Release suitable National Park land for suitable development.
7) Build a new city, planned from the ground up where water is plentiful.
8) Increase trade apprenticeships wages to a living wage (Gov sub if required).
9) Remove stamp duty on residential property as should have occurred when the GST was introduced. Replace revenue from stamp duty with a better deal on mining revenue (see Norway).
10) Restrict personal residential property investments to 2 properties only. Commercial un-restricted.
11) Prohibit foreign and student ownership of residential and rural properties by: companies, trusts and personal - review after a period with a caveat of no foreign ownership unless $AU is 1:1 with $US / EURO whichever is higher.
12) Mandate that Australian Councils review, accept or reject development application within 3 months (not 18 month as appears to be the norm), allow additional 1 month for Council reasonable amendments, fine the council 5% of final development value if Council is non-compliant.
To avoid automatic Council rejection, all rejected applications automatically go the Land and Environment Court for review and ruling within 3 months. If LEC ruling not made within allotted period the application becomes automatically approved.
Now moving on to the Reserve bank pathetic interest rate f**kup that caused the doubling of prices in the past 4 years. Too low for too long. Set monetary policy at 6% to maintain a strong $AU which will control imported inflation.
All the above will allow the market to determine fair value and increase supply of housing in Australia ie. deflate prices, so 7.5% home loan mortgage becomes affordable, mandate bank margin at 1.5% ensuring stability. (Market forces regulate business loans)
To control inflation / deflation sliding scale for gst taxable items eg: 5% under $10, 10% up to $50 etc (everyone pays)(Business and B2B sales capped at 10%). Allowing all citizens to benefit/pay not just mortgage holders.
The is a major defect in the logic to control inflation by increasing housing mortgage rates, (because it’s inflationary) which in effect places the burden of inflation control against mortgage holders.
The mainstream narrative that when mortgage rate drop again house prices will again go up is an example of how fucked up Australia’s housing market has become, this is all bought about by poor management of a fundament human right to pursue housing security for its citizens and its children.
Article by Chris Kay