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The head of the megabrand is wary about the government’s latest scheme to give buyers a leg up.
Angus Raine, executive chairman of Raine & Horne, has said he believes incentives from the federal government, such as the Help to Buy legislation currently before the Senate, will only serve to increase property prices and push the goal of home ownership further out of reach for Australians.
“We know from past experience that government initiatives designed to help home buyers get into the market sooner only increase already high levels of demand,” the executive said.
“Without any real increase in the supply of new housing stock, the rise in demand just serves to push up property values, making housing even less affordable”.
Instead, he’s advocating for the government to further incentivise building, while introducing stamp duty saving for downsizers to encourage a greater flow of properties into the supply chain until construction ramps up.
“The key to solving the housing crisis in Australia is to expand supply. Until action is taken to boost supply – and importantly, drive down construction times, we will continue to see fewer first buyers enter the market, which will have significant long-term impacts on the future financial wellbeing of the current generation of first home buyers,” Raine commented.
Citing recent research by Deloitte, Raine noted that per capita construction has been declining in Australia since the early 1970s, with lengthening construction times exacerbating the issue.
“Anecdotally, representatives of the building industry are telling me that average build times for a three-bedroom house have blown out from about seven months to 14 months in recent years due to the general inefficiencies and construction red tape that is apparent today,” said Raine.
Acknowledging that even with robust support, it will be some time before construction can expand to the desired levels. Raine suggested that the government should look to encourage rightsizing behaviours among older generations predisposed to make a move.
“Already we see incentives for downsizing through downsizer super contributions. Reducing the stamp duty burden that downsizers face when buying a more manageable home could relieve some of the current grid lock we see in the property market,” he said.
“Older home owners often want to sell but are reluctant to do so because of the stamp duty impost associated with buying a new home. If we can reduce the stamp duty cost, we have an opportunity to increase the stock of homes listed for sale until new supply can be increased,” Raine added.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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