Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

Not a week goes by where the issue of housing affordability is not discussed with me in our community. The question that is often asked is: 'How are our kids going to be able to afford to live in the community that they grew up in?'

House prices in my home city of Sydney continue to increase at an astonishing rate. In the past year we have seen further growth, at the rate of 18 per cent annually. That is the highest annual growth rate in 14 years, since the 12 months ending December 2002. In the last decade, house prices in Sydney have almost doubled—almost doubled in 10 years. That is quite simply ridiculous. What is more, they are forecast to continue to surge throughout 2017.

Discussing all things property and housing affordability has become the popular thing to do at barbecues and social functions around Sydney. A growing number of leading commentators on the issue continue to lament the endless price increases and the social impact that they are having, particularly on our city and on our nation's young people.

Commonwealth Bank senior economist Michael Workman said recently that housing affordability will continue to deteriorate even if house price growth slows. The amount required as a proportion of annual average household disposable income for a 20 per cent deposit continues to move out of reach of most households, he said, and he pointed the finger squarely at the Turnbull government for their lack of action on negative gearing and capital gains tax, which are boosting demand and lifting home prices to ridiculous levels.

The Reserve Bank's Governor, Philip Lowe, also recently pointed out the fact that many Australians are now burdened with more debt than ever before, with the debt-to-income ratio at a record 187 per cent for Australian households. Mr Lowe pointed out to a hearing of the economics committee of the House of Representatives last week the effect that those high debt levels are having on our economy. Because Australians have so much personal debt, and because wage growth is so low, they are simply not spending in our community, and that is affecting consumption growth in our economy, and that has been one of the major drags on our economy in recent years.

Contrary to the government's statements on this matter, housing affordability is not just an issue of supply. It is not just an issue of building more houses—particularly when you consider the rate at which new housing supply is being snapped up by investors. It absolutely beggars belief that, in the current environment, we have a situation where, due to this government's policy, an investor who is looking to purchase their sixth or seventh investment property and negatively gear it can get more support from the government than a young couple seeking to buy their first home. It just does not make sense. Negative gearing and capital gains tax discounts continue to give a leg-up and an advantage to investors compared to first home buyers.

The struggle is indeed very real for first home buyers. The proportion of first home buyers to non-first home buyers in New South Wales is well below the long-term average of 17.4 per cent, by more than half, at only 8.1 per cent. And I have done some research. The proportion of all buyers who are investors nationally continues to grow. In 1992, the proportion of all housing finance that went to owner occupied housing finance was 84 per cent; to investors, it was 16 per cent. In 2000, that figure for owner occupiers had fallen to 69 per cent and investors had grown to 31 per cent. Then, in December 2016, the proportion of all finance going to owner-occupiers was 60 per cent and the investor finance had grown to 40 per cent. There is something going on, and it is that negative gearing and capital gains tax are giving an unfair leg-up to investors over owner-occupiers and first home buyers, and that is the reason we are seeing this extraordinary increase in growth in house prices.

Labor understands. Labor is listening to the community about these issues. That is why we have developed a good policy that will take pressure off house price increases, particularly in the bigger cities. Our tax reform package includes ensuring that we reduce the amount of negative gearing by grandfathering it and ensuring that we reduce the 50 per cent discount on capital gains tax. Labor is working to fix this issue of national importance. It is time the government pulled its finger out and did the same thing.