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