Australia Budget to Tackle Housing Affordability, Morrison SaysBy
Home prices rising most in 7 years have stoked bubble concern
No changes to tax breaks for property investors, Morrison says
Australian Treasurer Scott Morrison signaled next month’s budget will include measures to address housing affordability, amid mounting concern soaring home prices are locking young people out of the property market.
The government is considering steps to boost the supply of homes and ways to lure institutional money into social and affordable housing, Morrison said in a speech to the Australian Housing and Urban Research Institute in Melbourne on Monday.
“Dealing with housing affordability must involve a scalpel, not a chainsaw,” Morrison said.
Rocketing home prices, particularly in Sydney and Melbourne, have heightened concern among regulators about the risk of a housing bubble, prompting the Australian Prudential Regulation Authority to last month tighten restrictions on interest-only loans favored by property investors.
Morrison said high housing prices, which mean many young people on even high incomes are now becoming long-term renters, are cascading through the system and pushing up rents for low-income earners.
The government is considering a “series of options” to encourage Australian pension funds to invest in affordable housing, “not so much as a real estate investment, but a longer-term fixed-interest investment that can comfortably sit within institutional investment portfolios,” he said.
However, Morrison ruled out changes to tax breaks for property investors that some analysts blame for helping push up prices, saying 2 million taxpayers have an interest in a residential investment property. So-called negative gearing allows landlords to deduct losses from investment properties off their total tax bill.
“Regardless of one’s opinions of the merits or otherwise of negative gearing, it is an established and structural component of Australia’s housing markets.” he said. “Disrupting negative gearing would not come without a cost, especially to renters, let alone the wider economic impacts.”