Federal Parliamentary Inquiry into Home Ownership

Monday 17 August 2015 @ 9.03 a.m. | Legal Research

On 24 April 2015, the Federal Parliament announced an inquiry conducted by the Standing Committee on Economics into Home Ownership in Australia. Public hearings for the inquiry are currently in progress.

Terms of Reference for the Inquiry

The Committee will inquire into and report on:

  • current rates of home ownership;
  • demand and supply drivers in the housing market;
  • the proportion of investment housing relative to owner-occupied housing;
  • the impact of current tax policy at all levels; and
  • opportunities for reform.

The Committee will also give due regard to the aspects of the current Tax White Paper process being conducted by the Government that pertain of Housing Australia.

The Chair of the Committee, John Alexander, said:

"home ownership is an issue that lies at the core of the Australian dream and represents the largest investment that most taxpayers will make during their lifetime. The importance of this issue throughout our nation makes it worthy of a detailed inquiry...home ownership is an issue that affects us all and there are many Australians who are now struggling to buy a first home, particularly in our major cities. The committee wishes to examine whether the current policy settings are optimal to ensure that all Australians have a fair chance to own their own home."

Reactions to the Inquiry

The Inquiry has already received over 50 submissions and has held public hearings in Canberra, Sydney and Melbourne over the issues involved.

There have been a variety of submissions. The Residential Development Council made a submission on behalf of the Property Council to the House of Representatives' Inquiry into Home Ownership, urging the Federal Government to take a greater role in this crucial area.

Housing Industry Association managing director Shane Goodwin said that ensuring strong levels of ownership should be a priority for the government. Mr Goodwin said the focus in the inquiry on taxation is welcomed as “the disproportionately high tax burden on new homebuilding is one prime reason that many Australians who should be purchasing their first home are not able to do so.”

Economist Saul Eslake has told the inquiry that the home ownership rate of 67 per cent recorded in the 2011 census is the lowest since 1954. The decline is greatest among households headed by those aged between 25 and 55 years. Mr Eslake says that while shifting preferences among young people might explain some of the change, unaffordable housing is likely to be the main cause. He says rising property prices - driven by low interest rates and more readily available home loans - are responsible for much of the rise but he also criticises Federal, state and local government policies for compounding the problem.

The committee also heard from Reserve Bank of Australia head of financial stability, Luci Ellis, who warned that changing negative gearing rules was not the answer to the housing affordability problem and a holistic review of tax incentives was needed.

Mortgage Choice CEO John Flavell has also questioned the lack of industry consultation in the lead-up to the inquiry:

"“We believe anything that is done to help improve housing affordability and make it easier for people, particularly first home buyers, to purchase property should be applauded. That said, we seriously question the purpose of the government’s upcoming inquiry into home ownership...The vague terms of reference that have been released to the public suggest this inquiry is another case of political grandstanding. Topics the inquiry will cover – from ‘demand and supply drivers’ in the property market to the ‘impact of current tax policies’ – are a constant point of discussion in the community and covered by media most days of the week..While the wider public has been invited to make submissions to the inquiry, industry has not been consulted nor briefed on any specific objectives. This is disappointing to say the least, as industry can help make recommendations that are not only realistic, but affect positive change.”

The final reporting date for the inquiry is 3 December 2015 and public hearings will continue throughout August and September 2015.

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