There's been no shortage of discussion surrounding housing affordability over recent years, and it seems the debate is still far from over. All sorts of theories have been put forward on why Australia's house prices are rising, ranging from the impact of overseas investors to a supply shortage.
However, the Housing Industry Association (HIA) has put forward its suggestions on what needs to be done to lower property values. With the cash rate at an all-time low of two per cent for another month, it's important that anyone who is in the position to buy a home is able to do so – but the HIA argues that some changes in policy settings might be needed.
The centrepiece of the HIA's strategy is to address the taxes imposed on buying property. Stamp duty and GST are the two of the biggest expenses that buyers face. Although GST doesn't apply to existing properties, it still has an impact on new homes, which could ultimately affect the construction of properties.
Secondly, the HIA recommends changing planning laws so that restrictions aren't faced when building new homes. As supply remains a big problem across many parts of Australia, it needs to be as easy as possible for projects to get off the ground.
HIA chief economist Harley Dale said: "New housing is not reaching the market quick enough to respond to demand, which ultimately puts upward pressure on prices."
The Reserve Bank of Australia revealed at its meeting on 2 June that there has been a significant rise in dwelling construction over recent months. If this is to continue, planning restrictions may need to be addressed moving forward.
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