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A new inquiry into how lending and financial regulation is impacting home ownership is set to be undertaken by the Senate.
The Senate has voted for a new inquiry to examine how Australia’s financial regulation can drive home ownership.
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Conducted by the Senate economics references committee, the inquiry seeks to explore ways to reduce lending costs and improve accessibility for first home buyers.
The inquiry will hear from Australian borrowers, the market, and the Australian Prudential Regulation Authority (APRA) and will consider reviewing the current 3 per cent buffer (however, APRA recently said it believed the current buffers were still appropriate).
It aims to assess whether the present financial regulatory framework adequately prioritises the goal of home ownership for Australians, with particular reference to:
- APRA prudential standards and Corporations Act 2001 provisions for lending;
- the nature and type of debt and equity arrangements being used to underpin housing development;
- the appropriate involvement (if any) of corporate and institutional funds in the provision of housing;
- the effectiveness of mechanisms to monitor investment in the residential property market;
- the tax treatment of residential property and impacts on demand and house prices;
- the adequacy of metrics available to policymakers for monitoring the ratio of new housing supply relative to population growth;
- examples of effective priority treatment for aspiring Australian homeowners that do not compromise financial stability; and
- any related matters.
However, according to the committee’s lead, senator Andrew Bragg (the shadow assistant minister for home ownership), the inquiry “will be about people, not institutions”.
“The nation can do more to support the aspiration of first home buyers. Australians must be able to have access to a mortgage as a prerequisite for a first home,” he said.
“We will generate more options to tilt the scales in favour of first home buyers. We will investigate lending practices by banks and private credit, opportunities to drive deregulation, competition and consider eligibility barriers to first home finance such as HECS.
“Getting institutions to better serve individual aspiration stands in contrast to Labor’s corporatist and big government approach to housing.
“If the average working Australian loses access to capital for a mortgage to fund their family home, this will cement the intergenerational divide and destroy the Australian Dream.”
Indeed, Bragg has said he is concerned that “the Australian Dream is slipping away from younger Australians” and that the committee wanted to “tilt the scales in favour of first-home buyers”.
Speaking to ABC Radio Sydney, Bragg said that the current buffers “may be too cautious”.
“There’s a very heavy regulatory burden here, and so we want to look at the 3 per cent buffer. We’ll look at the impact of HECS debts to see whether they are damaging the prospects of first-home buyers. We’ll look at the ability of people to get access to housing finance,” he said.
“The status quo is that the Prudential Regulator APRA forces the banks to consider HECS debts when they are assessing loans for home buyers. For people under the age of 40 that have substantial HECS debts, and they’re already facing a very high deposit cliff, the HECS debt could be the thing that tips them out of getting access to a mortgage.
“We are going to look at whether there are any policy options there for us to defer HECS repayments, for example, because I don’t think anyone imagined that HECS debts would be retarding the ability of people to get into the first-home market. If you can’t get access to a first home, you’re not going to have, in many cases, long-term retirement stability.
“It’s a very important thing that we change course for Millennials and Gen Z who feel that they will never own a house.”
Submissions for the inquiry are open until 26 September and a final report is expected by 5 December.
Housing a human right
Issues around housing affordability and adequate housing supply have been at the forefront of the political agenda in recent months.
Recently, ACT independent senator David Pocock and member for North Sydney, Kylea Tink, introduced a private member’s bill into the Senate and House of Representatives that would require adequate housing to be treated as a human right for every Australian by mandating that the federal government make a long-term plan to transform Australia’s housing system.
The bill would, the pair said at the time, require current and future governments to develop, implement, and maintain a 10-year National Housing and Homelessness Plan in line with legislated objectives, including improving housing supply, affordability, and ending homelessness.
“We need big ambition and bold action if we are to stand any chance of solving Australia’s crippling housing crisis,” Senator Pocock said.
“The complexity of this crisis requires a long-term strategy and commitment that endures beyond short-term political cycles. Legislating the ongoing requirement for a National Housing and Homelessness Plan can help deliver that.”
Tink said: “Every Australian deserves the right to an adequate standard of living, which includes the right to adequate housing. Access to safe and secure housing is one of our most basic human rights and is fundamental to individuals, families, communities and our nation thriving.
“For too long, our approach to housing policy has been piecemeal, short-term, or simply put in the ‘too-hard basket’ and the results have been disastrous.”
And, speaking to our sister brand Lawyers Weekly, the Honourable Kevin Bell AO KC appeared on The Lawyers Weekly Show to discuss what he called Australia’s “housing disaster” and how Australia has “lost its way” on housing matters.
Now, the Australian Human Rights Commission has pledged its support for the bill.
[Related: New shadow assistant minister for home ownership announced]
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