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Expert Comment on NSW Govt. Budget Housing Affordability Measures - Measures could be adopted by foreign buyers to take advantage of first home buyers.

Media Release: 2 June 2017 

For Immediate Release

Media contact: Stieve De Lance, Reputation Australia 0431139681 sdelance@reputationaustralia.com.au 

 

Expert Comment on NSW Govt. Budget Housing Affordability Measures - First Home Buyer Policy

(Sydney) While welcoming the Government's action on the housing affordability crisis that exists in NSW and pleased that they have adopted some of his suggested white paper measures, he says that he isn't sure the policy goes far enough and warns the measures could be adopted by foreign buyers to take advantage of first home buyers.

Analysis by Robert Snell, Certified Financial Planner and Housing Affordability Expert from Life Values Pty Ltd regarding the NSW State Government First Home Buyer Policy released today.

Robert says the adoption of some of his measures such as the announcement of housing supply to be a positive step. "More supply is an important factor in reducing competition between first home buyers and the rest of the market which includes property investors." He also welcomed changes to stamp duty but thinks the changes don't go as far as it could.

Robert had in his white paper "The real home Truth", identified six issues where the State Government could take action. These covered: (1) housing development and supply, (2) creating first home buyer zoning, (3) looking at stamp duty, (4) reducing the cost of the approval process, (5) setting housing affordability goals and (6) making housing affordability a state and national economic priority.

"Certainly the increases in the stamp duty surcharge make competition fairer for first home buyers at a price point. But if foreign investors want to buy in Australia, they might just buy cheaper properties, which are the same properties first homebuyers would buy. Without seeing the economic modelling on this, it's hard to determine how effective a measure that is in isolation."

"The removal of stamp duty for first home buyers on properties valued up to $650k is a welcome change. A quick analysis of property stocks at Domain reveal that this affects 26% of properties available in the Sydney region". He says that this is particularly welcome news for people living 30km or more away from the CBD, given most of these properties fall at this price point. For people who work in Sydney though, this change won't do much to make properties more affordable given the median house price is $1.15 million. 

"It's important to remember higher incomes and better-paying jobs are located nearer the main CBD. So if you live further away from the CBD, you face a trade-off between lower average incomes and higher commuting time. "I find that this can particularly discriminate against families with working mothers, who are always time poor. Most people, including those with families, need to live within a reasonable distance to work. The further you get away from work, the harder it becomes and the fewer jobs there are."

Robert has also identified limited stamp duty changes disadvantage older people. "Many older Australians would like to downsize their home as they retire from work. This would free up larger properties for families and first homebuyers that are closer to the CBD. By not looking more widely at stamp duty, we're limiting the freeing up of this existing supply. The announcement might be seen to favouring developers as it focuses supply on new developments, rather than optimising existing stocks".

His analysis concludes that there are some essential measures missing from the policy announcement including reducing the cost of the approvals process, setting housing affordability goals and setting housing affordability as State and National economic priority.

He says that planning and building plans need to be more efficient. "We need to streamline the process of approvals in a way that cuts both the cost and red tape. These costs end up getting passed on to the end consumer and increase the cost of housing for everyone, including first home buyers who can least afford it".

First homebuyer zoning was also missing from the announcement today. "By creating a stock of homes that can only be bought and sold by first home buyers, we will see a build up of affordable property that can only be exchanged by a smaller segment of the market, without the interference of foreign and local investors."

The plans released also failed to identify housing affordability goals.  Research shows that in 1981 according to Census figures, 61% of 20 to 34-year-olds had bought a property. By 2011 that figure had dropped to 43.2%. It is forecast to drop further to 23.7% by 2019.

"Increasing supply alone won't fix the problem; we need to look at the price too. There's no point in building more properties if first home buyers can't afford them because the prices are 12 times earnings – like they are now".

In today's borrowing market, the international standard is that property prices are above three time’s annual earnings are considered unaffordable.

"I'm calling on both Federal and State Governments to set a specific target on the percentage of Young Australians who should be able to buy a home. This should include a housing affordability target around a price to earnings ratio for singles, couples and families. Developing policies that help achieve these goals should then follow. These State Government measures work in isolation of the Federal Government measures recently announced.

While incentives for Local Government are included in this announcement, it is yet to be seen if they are sufficient to get all councils on board. By 2036 the population of Sydney will grow from the current 5 million to 6.4 million people. Nowhere in any Local, State or Federal Government policy do we see if this population will be owners or renters. At 12 times annual income, you’d argue that most people will be renters because we’re not addressing an affordable price target. These proposals may stop the problem from getting worse but it doesn’t solve the core problem that properties are expensive to what average Young Australians earn".

"If we can't get governments to work together, then we propose to create a National Housing Affordability Planning Organisation (NHAPO). NHAPO would have access to high-level economic analysis and could then work with existing city-based groups such as The Greater Sydney Commission along with infrastructure bodies such as infrastructure Australia as well as Federal, State, Local Governments and their Departments,"

About Robert:

Housing Affordability Expert, Robert Snell has a personal challenge: To help 1000 young people buy and pay off their first home in 80-120 months   He believes that if you work in a city, you should have a reasonable chance to buy a home in that city and that rising home prices are not a sign of success – being able to house your population is. He feels at some point, a home must just be a home and not an investment if Australia is to continue to house its growing population. 

Robert has been a passionate advocate for first homebuyers for many years and has seen the challenges first hand with his client base. Parents of adult children and young adults themselves increasingly worry about how they will ever be able to afford to buy a home. He also worries how his son might ever afford to buy a home in Sydney. He has written and submitted a White Paper called, THE REAL HOME TRUTH: Why Unaffordable Housing for Young Australians Hurts Us All. It explains historically how we got to this situation in Australia and how we can turn things around.

Robert Snell is available to discuss 

·       Labor’s plans for housing in NSW        

·       Tips on Saving

·       How to get your first home 

·       What the country should do to solve this problem and its historical context

·       HECS/HELP and affordability

·       Provide case studies 

Robert holds a Degree with Majors in Economics and Political Science and a Diploma of Financial Planning. Robert is a recognised as an SMSF Specialist AdvisorTM and a Certified Financial Planner®. Unlike other advisors, Robert has been a fee-for-service advice provider for more than 29 years. 

Robert Snell is an Authorised Representative, and Life Values is a Corporate Authorised Representative of Financial Services Partners Pty Ltd AFSL 237 590 ABN 15 089 512 587. 

For further information: 

Media contact: Stieve De Lance, Media Relations, Reputation Australia at 0431139681 sdelance@reputationaustralia.com.au 

Footnotes

1. Domain March 2017 – State of the Market Report.

2. Bleby, M. (5/4/2014), Boom threatens the great Australian dream of a home, Sydney Morning Herald. 

3. Nine News (13/7/15), quoting from BIS Schrapnel

4. Nine News (13/7/15), quoting from BIS Schrapnel

5. Demographia (2017), 13th Annual Demographia International Housing Affordability Survey: 2017, 28.

6. Demographia (2017), 13th Annual Demographia International Housing Affordability Survey: 2017, 28.

7. 2016 Population Projections, NSW Government Planning and Environment


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