Prosper Australia

Land Hoarding the Real Threat to Housing Affordability

It is govt fiscal policy at all levels rather than land supply issues that are leading to the housing crisis.

“The reductions in Land Tax at a State level and moves away from Site Rental to Capital Improved Value rates by local governments (Victoria) have been the real culprits” states Prosper Australia spokesman Karl Fitzgerald.

The pressures on housing prices surely started with the Federal Government’s 1996 Negative Gearing reforms and were enhanced by the halving of Capital Gains in 2000.

“A combination of these policy changes have given land speculators free reign around Australia. A decent holding charge on land is needed in the form of a well designed Land Value Tax” continued Mr Fitzgerald.

Julian Disney from ACOSS stated that a more substantial Land Tax which pensioners can defer would reduce housing pressures, alongside the abolishment of stamp duties (Lateline 21/08).

One can read between the lines that City boundaries and zoning restrictions are threatening Property Developer profits. Large tracts of land are less likely to be released in the future with urban sprawl pressures threatening local & State Councils.

This threatens the huge economies of scale Property Developers make on a typical 100 acre development. In an environment where housing prices are unlikely to continue their meteoric rise, any such limitations will further threaten profits.

Instead Govt policy should encourage the growing amounts of vacant land throughout suburban Australia with a decent Land Tax. Small to medium sized builders would support such a move. The city of Philadelphia’s phenomenal turnaround is evidence of how effective a decent holding charge can work in encouraging infill development and avoid the development of slums.

Contact: Karl Fitzgerald
Prosper Australia 03 9670 2754
media@prosper.org.au

So the State government is now facing a shortfall of $600 million dollars for schools in needy areas following the decision not to sell the Snowy Hydro (The Age, June 3, “Howard’s Snowy Meltdown”). But from where is the State government going to get the money from?

One obvious avenue is to renege on the shameful proposal to cut the top rate of land tax from 3.5 to 3 percent. This $200 million dollar gift to the biggest landlords in the state stands in stark contrast to the need to invest in our children and their future.

Landlords are well recognised as the least productive class in society. Perhaps the ALP needs to decide whether it is the Australian Labor Party or the Australian Landlord Party. It will be interesting to see whose interests they end up supporting.

Sincerely,

Lev Lafayette
Media Officer,
Prosper Australia
1st Floor, 27 Hardware Lane
Melbourne 3001
Victoria Australia
Tel 03 9670 2754