What we learned from the leaders’ debate – housing policy

In the leaders’ debate both sides spruiked their housing policies, almost all of which will increase demand and push up housing prices. When challenged on this they then both denied that their policies would push up demand and increase housing prices. This is despite all the experts saying they will.

Housing is one of the issues that people across Australia are genuinely concerned about. Yet both major parties continue to put up policies that will at best make no real difference and at worse make housing less affordable.

In the long term this is going to be bad for both major parties. If people don’t think that either side has a credible plan, and if they keep seeing housing affordability get worse, they are going to look elsewhere (and perhaps already are).

When asked about changes to negative gearing and the capital gains tax (CGT) discount, Dutton claims that these changes reduce the number of rental properties and push up rents. This is false.

The reason reforms to negative gearing and the CGT discount work is because they push out investors. But these investors are replaced by first home buyers, who currently rent. So, it is true that these reforms will reduce the number of investor properties, but they will also reduce the number of renters. It will turn renters into homeowners.

Homeownership rates have been falling for the last 25 years. At the same time rates of renting have increased. Changes the negative gearing and the CGT discount are designed to reverse this. That is how you make housing more affordable. That is how you give people hope that they will be able to afford their own home.