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Home owners penalised for lack of supply

24 September 2009 Reporter

The Real Estate Institute of Australia (REIA) has hit out at the Australian Housing and Urban Research Institute’s Tax Expenditures & Housing report, saying the research fails to address the problem of housing supply.

“This report does not deal with housing supply and assumes that by addressing the demand side that this will solve the problem for many aspiring home buyers,” REIA president David Airey said.

According to the report released earlier this week, subsidising the owners of housing increases the demand for housing and capitalises the value of the subsidy into higher house prices.

“Owners are compensated by the subsidies they receive; renters are not. Overall, therefore, the subsidies provided to housing through the tax expenditures covered in this paper are both vertically and horizontally inequitable,” the report said.

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Mr Airey said the report’s suggestion of adding a capital gains tax or land tax to solve the problem of a lack of supply would penalise current home owners.

“Treating a lack of supply with taxes is the same as treating a headache with a hammer,” he said.

Home owners penalised for lack of supply
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