Malcolm Turnbull will form a government after a knife-edge election that took a week to declare a victor, but with the results of five lower house and many senate seats yet to be decided what will this mean for housing?
Is negative gearing back on the table? What are the independents’ views on key housing issues?
And what will happen with housing policy if it reaches a likely hostile Senate?
The election result will be well received by many people investing in residential housing.
The Turnbull Government went the election with an unchanged negative gearing policy, arguing that any changes to this tax benefit and capital gains tax would see rents rise and the value of homes fall.
REA Group Chief Economist Nerida Conisbee says the re-election of the Turnbull Government is good news for investors.
“The election result will be well received by many people investing in residential housing, particularly those that take advantage of the incentive to invest,” Conisbee says.
“It is likely that those involved with developing and selling real estate will be similarly relieved.”
“Australia relies heavily on private investors for rental housing. Any changes may have led to fewer private investors and a potential shortage of rental housing.”
The government has secured confidence and supply from independents Cathy McGowan in the Victorian electorate of Indi and Bob Katter who represents Kennedy in Queensland. The Coalition is currently on track to claim 75 seats, which with the addition of the support from these independents will guarantee the return of the Turnbull Government.
Both Katter and McGowan have ruled out changes to the current system, but the views of independents in the Senate do differ.
This could become important, depending on the outcome in the senate. The Australian Electoral Commission says the final make-up of the senate for this the 45th parliament, may not be known for weeks.
Jackie Lambie won’t rule out changes to negative gearing. Nick Xenophon, who has one candidate from his party in the House of Representatives as well as several senators, says he is in favour of “very gentle tweaking” of this policy area.
While he thinks that Labor’s policy to slash capital gains and limits negative gearing to just new homes went too far, he still advocates “modify(ing) negative gearing to encourage the creation of new affordable housing stock”.
Derryn Hinch, who admits to having negatively geared his properties, says “…I’d be a hypocrite because I own a negatively geared apartment, but I think that (housing affordability) is a problem. I’m just not sure if (changing the policy) is the way to go right now.”
The Property Council of Australia says housing affordability is “a real issue across our major cities” and “the reality is neither side made a substantive effort to address this issue”.
“The need for supply-side solutions is clear. The Government must move in this space and it can start by re-establishing the National Housing Supply Council and by developing competition style payments to address supply blockages,” says Chief Executive of the Property Council of Australia Ken Morrison.
“We have a major housing affordability problem in our cities and we must tackle the policy impediments that have contributed to this crisis,” he says.
Meanwhile, the Housing Industry Association says the Turnbull Government needs to establish a housing ministry.
“Australia needs a Commonwealth Housing Minister – a senior Minister in cabinet to provide national leadership, to coordinate federal, state and local government housing programs, to guide important industry policy reform nationally, and ensure housing has a front seat in cabinet discussions around taxation reform, national budget repair, infrastructure and workforce development,” says HIA Chief Economist Harley Dale.
Not having such a ministry could hurt the nation’s credit rating.
“Procrastination could well be the nation’s Achilles heel. A lack of federal focus on housing policy reform increases the chance of a ratings downgrade,” says Dale.
Date: 11th July 2016
Author: Danielle Cahill