New Australia

Project K2 Housing (Victorian Office of Housing).

Why Housing is Un-Affordable

The Australian tax system compounds government inaction to make housing un-affordable:

• Generous Negative Gearing and Capital Gains Tax concessions available to property speculators price first-home buyers out of the market for established homes while providing insufficient incentives to build new ones.
• 'First Home Buyer' schemes place thousands of dollars in the hands of most bidders to further inflate prices. In reality these grants may as well be called 'property seller's schemes' as the benefit passes through the first-home buyer's hands to the seller without advantaging the buyer.
• State property stamp duty does not attempt to tilt the playing field back towards the first home-buyer.
• Governments have slashed investment in affordable housing.
• Foreign nationals and companies are permitted to hold Australian residential property.

Federal Solutions

The Federal Government can easily solve this problem with a few simple steps:

• Phase out negative gearing of investment property losses against other classes of income such as PAYE or share dividends. Phase out the claiming of depreciation and other property expenses against other income streams.
• Abolish Capital Gains Tax concessions on investment property.
• Use the $5 billion saved to build 50,000 discount inner-city apartments per annum.
• Phase out the holding of Australian residential property by foreign nationals. Ensure that this is not circumvented through devices such as trusts, company structures and the like.

Just over 30% (1301.0 - Year Book Australia, 2008 - ABS) of households live in rented premises and many home owners are concerned about how they will help their children buy housing. For the small party abolishing speculator tax breaks is a politically smart policy.

State Solutions

State governments can offset the destructive impact of Federal speculator tax rorts using property stamp duty:

• Abolish stamp duty on the purchase of property.
• Replace it with stamp duty on the sale of property - a vendor tax. This benefits all fist home buyers and business start-ups.
• Abolish 'First Home Buyer' grant schemes which just inflate property prices.
• Use thr savings to directly fund inner-city appartments for public housing or sale to first-home buyers.

Why build inner city apartments?

• The centre of the city is where the 'housing deficit' and 'work surplus' is. That's why there is a tidal flow of commuters.
• Public transport systems to the city in the morning and from it in the evening are already at capacity. Public transport against the flow is under-utilised.
• Much of the land in Melbourne's CBD North of Burke Street accommodates only one or two story buildings. Much of this is run down or underutilised. Federal or State Governments should acquire and parcels of these properties for the purpose of building affordable apartment blocks.
• As the new CBD housing is filled with people working in or near the CBD thousands of outer-suburban rental properties become available for those who are not working and are under housing stress. Rentals across Melbourne will plummet as supply and vacancy rates increase.

The benefits of locating new housing in the CBD vs. the middle or outer suburbs.

1. Residents of new CBD apartments can commute to anywhere using empty 'counter-flow' public transport.
2. Residents of new Inner city apartments cannot fit onto packed commuter trains so can only commute outwards on their line.
3. Residents of new Outer suburban housing either cannot fit on trains in to the CBD or else displace those currently using public transport to the CBD.

Sustainable Designs

Apartment blocks can be built to a sustainable design. An example is the recent Project K2 Housing in Raleigh Street, Windsor, Melbourne. This project created 96 public housing apartments for $32 Million.

Each K2 Apartment is anticipated to need:

• 55% less mains electricity
• 46% less gas from the mains supply, and
• 53% less mains water (including irrigation)

50,000 Discount Apartments Per Annum

The cost of the K2 Project apartments was about $333,000 each ($32 Million / 96 units ).

If $5,000 Million is saved from abolishing negative gearing and the CGT discount then 50,000 similar units could be built and offered for sale for about $230,000 each to first home buyers - a $100,000 discount.

Land for Housing in the CBD

Here are a few of the many dozens of sites actually in the Melbourne CBD that could be used for affordable housing. Note that these sites have existed for decades; they are not just temporarily vacant pending development.

The first one shows a group of run-down single-story shops occupying prime land in the heart of the CBD:

'Sam Bear' in Russell Street. This could be a forty-storey apartment tower.

Nearby is this bomb-site car park next to Wesley Church:

Another CBD 'bomb-site' car park.

Around the corner on Lonsdale Street is a whole strip of run-down low-rise shops and another bomb-site car park:

Prime land on Lonsdale Street used for parking.

Many more sites exist in and around the CBD - while CBD workers struggle in from homes on the urban fringe.

Foreign buyers up prices

15^th Mar 2010: "Jellis Craig says that, last year, 36 per cent of their sales in Kew, Hawthorn, Canterbury and surrounds were to overseas purchasers, predominantly Asian buyers (up 125 per cent on 2008), particularly from China and increasingly from India....We know that the 2009 changes to the Foreign Investment Review Board rules made access to secondhand properties a lot simpler for overseas buyers, forcing local buyers to dig deeper." more...

Rents to rise 50 per cent

4^th Apr 2008: Australian Property Monitors predict rents to rise 50% over the next 4 years. "More than half the nation's renters believe they will never be able to afford their own home." more...