Treasurer Scott Morrison will use a speech to set the scene for his housing affordability package.
THE Turnbull Government today is committing to help thousands of young Australians trapped in the rental market as it declares home ownership a major positive for the economy.
Treasurer Scott Morrison will focus on younger home-buying hopefuls who are slipping behind on housing independence, and other priorities for the coming Budget’s attack on affordability.
They include boosting investment in affordable rental housing, and overcoming the fractured nature of the Australian real estate market.
And he will reinforce rejection of changes to negative gearing because that could push up rents.
“It is a statement of the obvious that you can’t help first home buyers save for a deposit by implementing policies that increase their rent,” Mr Morrison said in a speech prepared for the Australian Housing and Urban Research Institute in Melbourne today.
The speech distributed by his office says: “Home ownership is a positive for the Australian economy, our society and the nation’s finances.
“If Australians are able to affordably own their own home and achieve housing stability, this can set them and their children up for success and reduce risks of welfare dependence.”
The proportion of homeowners has fallen from 71 per cent of Australians to 67 per cent over the past 20 years, with the biggest falls in Queensland and Victoria.
The group worst hit were Australians aged 25 to 34. Home ownership in this group fell by almost 10 per cent between 2002 and 2014, and is around 30 per cent.
“That is more than 160,000 young people that would otherwise be homeowners,” Mr Morrison said.
The problems are not limited to having to pay a landlord. There also is the instability of frequent moves.
Over 85 per cent of private renters move within five years and almost one third of moves are forced — three times the rate of other tenures.
“This is particularly concerning for families with children,” says Mr Morrison’s speech.
“These families need housing stability to have consistent, reliable and beneficial access to the services they rely on such as schools, medical assistance and other supports.
“This means access to longer term leases.”
The speech makes clear the Government’s chief difficulty in addressing housing affordability — the wide range of markets. This prevents the creation of a one-size-fits-all Budget’s strategy.
Median house prices in Sydney and Melbourne increased by 19 per cent and 16 per cent respectively in the past year and by about eight per cent per year on average over the decade.
The Treasurer will say that since 2006, the average number of years required to save for a deposit in these markets has increased from six to eight years in Sydney, and from five to six years in Melbourne.
Prices in Brisbane and Adelaide only rose on average by three per cent a year over the decade while Perth growth was only 0.3 per cent.
“Obviously there’s not a single national housing market and affordability is not impacting all Australians the same way,” Mr Morrison will say.
His speech says rental vacancy rates remain at or below their five year average which is less than two per cent in Sydney and currently 2.4 per cent in Melbourne.
“So who is going to supply and own the additional rental stock needed in the private market?” Mr Morrison said.
“Rental yields for investors are at 2.1 per cent in Melbourne and 1.8 per cent in Sydney. It’s less for affordable and social housing stock and hardly comparable to the yields available to institutions and corporates in other investments.”