Don't take property for granted

Don't take property for granted

The First National Real Estate CEO has warned state and federal governments not to expect the property market to continue to prop up the Australian economy unless they are willing to give it a little more of their attention. Ray Ellis shares his opinion.

"The Australian real estate sector, along with the resources sector, is currently bearing the brunt of government inactivity and overzealous taxation."

The strength of our property market is one of the factors that has seen Australia’s economy weather the recent GFC better than the rest of the world, and it is one of the key drivers of the Australian economy in general. Yet it continues to be plagued by government inactivity and overzealous taxation. Take for example, the recent budget, where there was no major announcement about the Australian real estate industry, but it is repeatedly subjected to unreasonable taxes, like resources.

Prices are being kept artificially high because of the imbalance of supply and demand.  In the first quarter of this year, Australia had 178,000 more potential home buyers than available properties, and this shortage is expected to push past 200,000 dwellings by the middle of the year. On current trends, by the year 2030, this gap could be as large as 640,000. This is despite First National Real Estate’s ongoing calls for governments to release more vacant land.

We are facing one of the worst housing shortages in our history, with no foreseeable easing of the situation in the near future. Housing approvals are still falling and we are already facing a net shortfall of 50,000 new houses per annum on current figures. And most experts are predicting we will exceed these expectations, worsening the situation.

The major factors driving this continued lack of supply are the inefficiencies and inconsistencies in residential zoning and approvals and planning guidelines limiting the land that can be developed for housing, both on our urban fringes and in established suburbs.

The other major factor is Australia is experiencing its fastest population growth since the 1960s. While the number of Australians is increasing by about two per cent a year, the number of new dwellings is growing at only about one per cent, putting further pressure on prices and keeping them unrealistically high.

One of the major beneficiaries of these higher prices is governments – they are all collecting billions in stamp duty. NSW alone increased its stamp duty receipts by 40 per cent in the previous year, and on top of all this, yet another new tax is to be introduced in that state, effective June, where a further quarter per cent will be added to property transactions – a further $90 million will be stripped from our industry.

The bottom line is that the regulations stifling house building or restrictions on building new houses need to be removed, and the tax incentive to building bigger houses should be reduced.

We need to listen to the original Henry Review and reduce state government stamp duties.Taxing super profits in resources is one thing, but these real estate taxes come from the pockets of ordinary Australians trying to buy their part of the Australian dream.

Housing Affordability is already on the decline and forecasts are that it will decline even further as strong demand and the ongoing lack of newly built homes will keep house prices increasing.

Inappropriate and cumbersome planning approval processes also need urgent attention. Queensland developers are still working on 2007 planning approvals.

First National Real Estate has also been calling for some time for a consistent unified and national approach to the property market.

While the appointment of a new Minister for Population may address some of these issues we face as an industry, land availability, housing approvals and stamp duty are part of a much larger picture.

Ray Ellis was appointed CEO of the First National Real Estate network in November 2004. This signaled a focus on the re-positioning and expansion  Australia’s largest independent real estate network that numbers over 500 offices throughout Australia and New Zealand.