In a piece of news which is of zero surprise to anyone, new research has confirmed that home ownership is dropping among young people and poor people – a Venn diagram with a fair bit of overlap.
Nor are they buying yachts, helicopters or shiny dental grills with “adequatesuperannuation4lyfe” spelled out in diamonds, incidentally, although that wasn’t covered by the Grattan Institute.
Pictured: not a young Australian.
The new reports is pretty scathing in its assessment of the responses of both state and federal governments.
“Unfortunately, the problems aren’t hard to find,” Grattan chief executive John Daley told the Guardian with regard to the picture of Australians in 2018.
It’s not just that policies initially introduced as a short-term encouragement (negative gearing, for example) became permanent policy, but that the economy has changed.
“Per capita income has been flat for five years as the mining boom subsided. State and territory governments continue to announce large infrastructure projects without doing enough homework beforehand. Home ownership is falling fast among the young and the poor, and homelessness is rising, [and] our schools are not keeping up with the best in the world.”
On the subject of property and infrastructure, the problem is kind of tangled. And one thing that gets mentioned a lot in these sorts of discussion is “stamp duty” – a massive upfront payment to the government which property buyers make every time they buy a place.
“A discussion about tax, you say? Why, please go on!”
All house purchases involve a big ol’ lump of money to the state government called “stamp duty”, an obscure term which could be more accurately replaced with “infrastructure levy” or “contribution to the cost of having you here, resident”.
Oddly enough, NSW has one of the lowest rates. A million dollar house in Sydney will mean $40,490 in stamp duty. Queensland’s the lowest with $30,850; Victoria has the highest at $55k.
Technically stamp duty is intended to pay for the following community expenses: “Health, Transport & Roads, Police, Justice & Emergency Services, Education & Training, Human Services, and Environment, Climate Change & Water.”
In reality some of those big developments aren’t exactly leading to a massive outpouring of infrastructure upgrading, as a windy stroll around the weirdly desolate developments of Sydney’s Green Square demonstrate.
That’s in part because the NSW government has used some of that stamp duty windfall to “improve its budget position”, as Daley puts it. Which is fine, all other things being equal.
Except right now, it’s not.
What even is this?
The ACT has phased out up front stamp duty in favour of an annual land tax, which arguably makes more sense for a place like Canberra – where people come and go relatively frequently – than a place where people tend to stay put.
And there’s an argument that giving first home buyers a stamp duty exemption makes it easier for them to enter the market, inevitably followed by claims that discouraging investment buyers limits rental stock at a time when more people are renting, and renting longer, than ever.
But that might be offset by people leaving rental properties in order to buy… although not the kids living with their folks until they can afford a place… oh god, my head hurts.
So what’s the solution? Well, with elections for the two most populous states coming up, and a federal election for a beleaguered federal government whose base tends more toward the “property-owning” demographics, it’s hard to be optimistic about progress, unless someone comes up with a way to make housing more affordable and simultaneously also jump in value.
Anyone know a good sorcerer with urban planning experience? If so, now’s definitely the time to get them in charge.