Current housing policies in Australia are contributing to a widening gap between homeowners and property investors, and renters, according to a new report.
The Renovating housing policy report by the Grattan Institute has revealed government tax and welfare policies are favouring homeowners and property investors over people who rent thereby increasing the divide between Australians who own a house and those who do not.
Grattan Institute Cities program director and author of the report, Jane Frances Kelly said the divide was income-based and generational.
“While home ownership is stable or declining slightly in Australia, there are sharp falls in ownership rates among households with low incomes or aged under 45.”
The report found that the government provided benefits to homeowners worth 36 billion ayear, or $6,100 on average for each homeowner household.
Residential Property investors were provided with nearly $7 billion, or $4,500 on average for each property investor in the form of negative fearing rules and capital gains discounts.
On the other hand, private renters received very little support through the tax and welfare system despite making up nearly one in four households.
The report shows that by increasing demand for residential property, these policies push up property prices and lock many homebuyers out of the market.
Combined with rules that restrict development in established suburbs, households are forced to buy on the city fringe, further from transport and jobs.
“It’s a rising form of inequality that damages economic productivity and the fair go,” Ms Kelly said.
The report urges governments to take a systematic approach to housing policy by setting clear principles and objectives over time and to produce policies that combine to achieve these goals.
“First we need a public conversation about who wins and loses from current policy, and how the playing field can be made more fair,” Ms Kelly said.
“If governments want to increase home ownership and at the same time give the many renters a better deal, they should reject policies that reward those who already own homes while making life harder for those who don’t.”