The Real Estate Institute of Australia (REIA) proposed three measures to address concerns on housing supply and affordability, which are currently at their "most significant on record."
REIA president Adrian Kelly said average homebuyers are faced with fewer properties to choose from that are priced at historical highs.
"We take no comfort in the current record prices we are seeing, because they are primarily driven by a lack of supply," he said.
"We would rather see 10 buyers happily enter the market through the availability of 10 suitable homes, than 10 buyers outbidding each other for one available home."
REIA's three-point plan proposed to the Standing Committee on Taxation and Revenue include the following:
- Abolishing "punitive taxes" on housing
- Building more homes
- Establishing a national housing plan involving the federal and state governments
Mr Kelly said these proposals present a "huge opportunity" to improve both affordability and supply across the board as Australia transitions out of the current phase of the COVID-19 pandemic.
"Stamp duty has been too often put in the 'too hard basket' and it would be great to see stamp duty reform from and centre," he said.
"We have recommended several different ways to better utilise existing housing stock and encourage increased listings to improve supply in the current cycle."
"This includes looking at new policy levers to encourage rightsizing as Australia's population ages."
Mr Kelly said talks and action about boosting housing supply should be strengthened especially given the impending reopening of international borders, which would apply pressure on housing demand.
Detached homes inching closer to $1m median
A recent report from Domain showed that the median price for detached houses is just a few thousand away from reaching $1m.
Over the September quarter, the national median house reached $994,579, representing gains of 3.5% quarterly and 21.9% annually.
Sydney, Melbourne, and Canberra recorded median prices that have already breached the $1m mark.
Separate figures from CoreLogic show that the median price of homes (including units) in Australia hit $686,339 in October.
Affordability versus accessibility
REA Group economist Angus Moore said surging property prices made it harder for first-home buyers to save up for a deposit.
"Over the year to September, prices shot up by more than 20% in capital cities and by nearly 25% in regional areas," he said.
"While rising home prices boost household finances overall, not everyone benefits. More than a third of Australians rent — for those wanting to buy, higher property prices mean having to save a larger deposit."
However, the record-low mortgage rates remain a silver lining for housing affordability.
Mr Kelly said that serviceability is easier nowadays than it was in 2018, when the cash rate is at 1.5%.
"Today, the cash rate is just 0.1% and the average rate for a new variable mortgage is 2.7%," he said.
"These low rates mean that even with today’s larger mortgages, average repayments are smaller than in the past."
This means, Mr Kelly believes, that accessibility has worsened for many homebuyers.
"No matter the price or interest rate, housing is very affordable for the 30% of Australians who have paid off their mortgage," he said
Given this, policies aimed at addressing affordability must take into consideration the accessibility of the market.
"It’s critical we keep in mind the distinction between servicing a mortgage and saving a deposit," he said.
"If we conflate the two into all-purpose 'affordability', we could end up with counterproductive policies that hurt those we’re trying to help."
Photo by Carnaby Gilany on Unsplash