Australia’s housing affordability challenges are more likely to be addressed by building more homes than through further tax reform, according to new research released by property valuation and advisory firm Herron Todd White.
The findings come from a survey conducted during the World Credit Union Conference in Sydney, where senior banking and financial services leaders were asked for their views on Australia’s property market, business confidence and the long-term outlook for housing affordability.
The survey found that 78 per cent of respondents believe increasing housing supply would deliver better affordability outcomes than further changes to tax policy. Three-quarters also said population growth has outpaced Australia’s ability to deliver new housing.
The results reflect a growing debate over the drivers of Australia’s housing crisis, with economists, industry groups and governments continuing to differ on the balance between boosting housing supply, planning reform, infrastructure investment and taxation settings.
While housing construction has become a major focus of federal and state governments, Australia has struggled to keep pace with demand. Rising migration, higher construction costs, labour shortages and planning delays have all been identified by housing experts as factors limiting the number of new homes entering the market.
The survey also found that 41 per cent of respondents do not expect housing affordability to improve over the next five years, highlighting continued concern about the outlook despite government efforts to increase housing supply.
Business confidence also emerged as an area of concern. Nearly two-thirds of respondents, 63 per cent, said they expect the Federal Government’s latest tax reforms to reduce business confidence.
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Herron Todd White Chief Executive Officer Peter Maloney said the findings suggest banking leaders see supply as the central issue facing Australia’s housing market.
“The message from banking leaders is clear: housing affordability is fundamentally a supply issue,” Mr Maloney said.
“While taxation policy can influence investment decisions, Australia simply needs to build more homes if it wants to improve affordability over the long term.”
The survey captures the views of banking and financial services executives rather than the broader public or the wider property sector. While the findings indicate strong support for increasing housing supply, policy experts have argued that improving affordability is likely to require a combination of measures, including planning reform, infrastructure investment, faster housing approvals, support for social and affordable housing, workforce capacity in the construction sector and settings that encourage appropriate levels of private investment.
The Federal Government has committed to increasing housing supply through initiatives including its national housing targets and support for new home construction. Whether those measures are sufficient to close the gap between supply and demand remains a point of ongoing discussion among governments, industry and housing economists.
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