Keeping it in Perspective

For those picking up the paper this weekend, there is good news! Today marks the end of the campaign trail and the advertising and soundbite onslaught that is the Australian Federal election.

In this election, more than any other election in recent history, housing (or in the words of one radio interviewer this week “the lack of housing”) has been the hot topic. Across the major and minor parties there has been much pointing of fingers, decrying of competitor’s actions, and a general consensus that “more must be done”. Some of the proposed policies have included everything from an artificial capping of interest rates for existing homeowners, to a joint ownership program where the Federal Government owns part of your home, to early access of superannuation, through to a promise of “a million new affordable homes.” That’s a lot to get your head around!

Setting aside the logistical and financial nightmare of trying to build 50,000 new homes per year specifically for affordable housing (as admirable a goal as this is) in an environment where land supply in most areas is virtually non-existent and the wait time and cost of new construction is rising by the month, these proposed policies create more potential eligible home buyers, but don’t create the homes for them to buy. You can’t go to the concert if the tickets are already sold out….

Supply is the issue. One that has only grown over the past decade and that is going to require work from every sector to solve. Keeping things local, in Cairns our supply issue has a lot to do with the fact that we live within a fairly tight stretch of coastline, with only so much land in that narrow band between water on one side, and mountain range and rainforest on the other. Ordinarily, this would dictate a mix of housing styles, and a greater mix of high density living in the city centre (and ideally affordable units at the lower end of the market). Post-GFC however, that style of development has been virtually non-existent and we have instead sprawled north and south, with a concession towards smaller lot sizes being a derided but necessary compromise to make the most of our space.

Everything comes at a cost, and relying on government to come up with all the funds means adding to a public debt which is already looking pretty hefty. What we need instead, is more incentive to invest in property in the private sector, and particularly in higher density developments. Its not an overnight solution, but the supply and demand equation needs to be balanced somehow, and we can’t keep adding to one side.

Tom Quaid is the REIQ Zone Chair for Cairns