Thread by @BrendanCoates

Yes. The political battle to address housing affordability is far from over. Here’s a quick thread as to why (1/n) @ErykBagshaw @GrattanInst

smh.com.au/politics/feder…

Housing affordability is now the 2nd most important issue for the electorate after healthcare (and above the economy) (2/n)

Australia used to be a place where your chances of owning a home didn’t vary much by income. But home ownership rates are falling rapidly among the young and the poor (3/n)

Most Australians still care about home ownership. Even among younger Australians 60%+ still think that owning a home is important to the Australian way of life politicsir.cass.anu.edu.au/sites/default/… (4/n)

We’re spending more on housing than ever before no matter how you measure it (5/n)

And rising housing costs are eating up a large share of gains in income, especially for those at the bottom (who tend to rent) (6/n)

And rental stress is rising for low-income earners in our major cities (7/n)

There are reforms that would improve housing affordability. But none of them are politically easy. Improving affordability involves making some tough choices. grattan.edu.au/report/housing… (8/n)

Tax reforms like negative gearing and the CGT discount would help, and could save $ billions for the budget each year, but they won’t make housing substantially more affordable. Tax breaks for housing just aren’t worth enough compared to a $7 trillion housing market (9/n)

Yes homebuilding is at record highs. But we’re not actually building that many new homes compared to record population growth (i.e. migration). At best we’re now just keeping up, and that doesn’t do anything to address past undersupply (10/n)

More housing supply would make the biggest difference in the long run. But that means changing planning rules to allow more density in inner and middle ring suburbs of our biggest cities where people want to live. Density has hardly changed in the middle ring in 35 yrs (11/n)

Our cities don’t have enough of the type of homes people say they want to live in (given the actual costs of each option) – semis, townhouses and apartments in inner and middle ring suburbs (12/n)

Current zoning rules make building more housing in inner and middle ring suburbs harder. Of course zoning also provides benefits in managing the impacts of various land uses on one another. But geez are the benefits really worth this? (13/n)

theconversation.com/rba-research-s…

In fact Australia’s housing stock per person has FALLEN since 2000 – one of only two OECD countries (along with Sweden) where that’s happened (14/n)

And there’s good evidence that building more homes would reduce house prices - that certainly appears to be the long term trend across OECD countries (15/n)

Lots of international studies show a strong link between house prices and strict zoning rules. See p.57 of our report for the full references: grattan.edu.au/wp-content/upl… (16/n)

Reducing immigration would make housing more affordable especially at a time when supply is constrained by planning rules. But reducing migration – which skews skilled and young – would probably make us worse off in the long run. (17/n)
theconversation.com/how-migration-…

The trouble is that while we know what would work and wouldn’t, politicians keep promising easy answers. First home buyers grants, downsizing incentives, taxes on foreign investors and empty dwellings just won’t make much difference (18/n)

grattan.edu.au/report/housing…

If you tell people that housing is easy to fix, it becomes even harder to persuade them to accept less popular, but more effective, alternatives like reform planning rules and tax policies (19/n)

And unsurprisingly, trust in government continues to fall (20/n)

And don’t be surprised if the young start voting for their self interest (21/21) END THREAD