Treasurers must step up for home buyers
This week's interest rate hike is a "disaster" for housing supply and urgent relief must take place across the country
HOME buyers and renters have been dealt a devastating blow with this week’s Reserve Bank interest rate hike.
That is the opinion of Urban Taskforce CEO Tom Forrest, who said the rate rise was “a disaster for housing supply”.
“Worse, the interest rate rise of 0.25%, taking the cash rate to 3.85%, will flow through to undermine project feasibility, meaning that fewer new homes will be built,’’ Forrest said.
“Ironically, this will exacerbate the current undersupply and result in greater inflationary pressure through higher home prices and increases in rents.
“The key message here for the nation’s treasurers is they must target their housing initiatives on stimulating housing supply and stop pump priming with handouts to new home buyers.
“Handouts are always politically popular but, without an increase in housing supply, they push prices up further.’’
He said treasurers across Australia are currently considering measures to boost housing through the 2026/27 budget cycle.
These measures must be focussed on easing the cost of delivering new homes, thereby improving project feasibility and stimulating housing supply, he added.
“To the extent that Federal Government spending has driven the recent spike in inflation, this must be reined in,’’ Forrest said.
“Spending measures need to be focussed on housing-related infrastructure that comes with a requirement that the states reduce infrastructure fees and charges by an equivalent amount.
“Tax-relief for new housing supply is critical. For example, a smart change to capital gains tax would be to increase the concession for new home builds, while reducing the concession for existing dwellings.
“This would result in stimulating housing supply, while reducing the taxpayer-funded price hikes on existing dwellings.
Forrest said it is time for treasurers to get smart about the way taxes and charges are applied.
“Tax the things you don’t want. Give relief to the things you need.
“The interest rate hike threatens to undo the good work to reform the planning systems of the nation. The RBA decision now puts the pressure on Federal Treasurer Jim Chalmers to announce measures that will stimulate housing supply without adding to inflation.’’
