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The charity network has called for a greater focus on improving affordability, suggesting that reducing investment tax concessions could be a way forward.
In its latest report exploring housing affordability and access in Australia, Homes for All, Anglicare Australia (Anglicare) has said that the country’s housing crisis is in desperate need of a fix.
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“Anglicare Australia has been working on the frontline of this crisis. We have seen pensioners competing for rooms in sharehouses, people in full-time work on the brink of homelessness and young people with disabilities stuck in aged care because they can’t find a home,” the report stated.
“Our services tell us of families living in tents and cars, and in many cases, our own workers are struggling to find homes in their communities.
“To say that housing in Australia is broken is an understatement. It is in meltdown, and we won’t be able to truly fix it until we redesign our housing policies so that they work for everyone.”
Separate findings have suggested that housing in Australia has surged in price at a rapid pace.
According to figures released by PropTrack earlier this month, housing values have increased nationally by an average of 34.3 per cent since March 2020.
SQM Research data stated that vacancy rates in Australia were 1 per cent in May this year.
In May 2020, this figure was 2.5 per cent.
Further, the Community Housing Industry Association stated in April that at least 25,000 social and affordable homes are needed every year as a means to respond to the current affordability crisis.
In response to this persistent trend, Anglicare’s report highlighted not only points of concern within Australia’s housing market, but potential solutions to be implemented over the next decade, one of which being a reworking of the tax concessions available for property owners.
“Changes to capital gains tax in 1999 encouraged investors to buy property, increasing investor demand for housing and pushing some first home buyers out of the market. In 1999, the CGT system was changed so that tax was levied on only 50 per cent of the capital gain on an asset held for more than one year,” the report argued.
“The CGT discount, together with negative gearing, turbocharged speculative investment in housing and led to dramatic price increases for the next decade and a half. With capital gains taxed less than income, investors have preferred investments with strong capital returns.”
According to Anglicare, negative gearing costs the Australian government $4 billion a year in foregone revenue.
“Tax incentives encouraging housing investors may also explain why the prices of low-value homes have increased faster than other homes. Increased investor demand for housing has likely been channelled into low-value homes that are lightly taxed under states’ progressive land taxes and tax free thresholds,” the report added.
However, the report suggests that reducing these discounts over the next 10 years would be used as a means to boost revenue for social and affordable housing.
“The revenue savings from these changes should be invested in measures that directly improve rental affordability, including a more effective incentive for new investment in homes for rent,” Anglicare argued.
A recent report by the Australian Housing and Urban Research Institute also highlighted mismanagement within housing policy, claiming that initiatives to encourage ownership were ineffective at providing equitable access.
According to the data, in the decade to December 2021, over $20.5 billion was spent on FHB grants, stamp duty concessions and other cash grants. Yet despite this, home ownership has decreased over the past 20 years, with prices also doubling over this period.
One explanation for this, according to AHURI, would be to pivot away from demand-focused interventions and embrace supply side as an alternative.
Find out more about housing affordability and access in the July issue of The Adviser, out now.
[Related: FHB schemes ineffective at bringing equity to housing: AHURI]
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