Without ‘genuine’ Government motivation and serious intervention, affordable housing is a complete illusion. | Mollard Property Group
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Without ‘genuine’ Government motivation and serious intervention, affordable housing is a complete illusion.

We hear year after year, decade after decade, that we need affordable rental and housing. We hear how concerned Government is to create affordable housing, however, here we are decades on and still saying the same thing, expecting to get a different result. Without ‘genuine’ Government motivation and serious intervention, affordable housing is a complete illusion.

Let us explain why.

To achieve affordable rental, we need affordable housing. This means we must build more economically than is currently being achieved, this however does not mean building with inferior construction but rather reviewing Government tax, outdated Council regulations that hold up development and union controls.

In addition land costs are soaring in the locations where we need affordable housing. This is because supply and demand are high in these locations, as they are convenient, desirable locations to reside. Compounding this, we are living in a time of massive population growth. This growth will not stop due to the fast-approaching financial pressure coming from the ageing baby boomers needs for medical, pensions and aged care. To cope with these incredible costs and stay competitive in the world, our cities will need to double in size over the next 35 to 45 years. Therefore, with such a massive financial burden coming our way, it is clear our situation in Australia will be financially untenable, unless we maintain this aggressive population growth strategy. Due to this, land costs in convenient locations to access jobs, entertainment and transport will continue to go up.

The real issue is the extraordinarily high Government tax on residential property. This tax adds around 20% to the purchase price of a property, plus ongoing land tax and rates add significantly to a tenant’s rental. If Government removed these taxes, this would reduce rent and housing purchase costs by approximately 25%. However, Government tax is just one problem in achieving affordable housing. Significant development costs are further compounded by a Council planning system that favours inappropriate objections from residents, who simply do not want change or development next door. Whilst this sentiment is understood there must be rules, if a development complies with the rules there needs to be an automatic approval and rejection of any objection that unnecessarily delays a project.

Delays not only cost Developers finance holding costs, but hundreds of thousands of dollars extra in consulting and legal fees just to obtain approval for a compliant development, that is stated in the local Government’s own planning codes and regulations.

Unfortunately, it does not end here, the building industry falls under the most militant union in Australia, where many Developers have experienced intimidation and have been forced to pay massive additional cost to ensure their site is not shut down or blacklisted. The cost of a union-controlled site adds substantially to the Developer and therefore is necessarily passed on to the renter or homeowner.

So, we conclude unless our Governments including Commonwealth, State and Local get serious about all the issues, affordable housing will remain an illusion. It is a political fantasy, touted as if Government are interested, but neither party has done a single thing about it.

The reason is obvious, residential property is a gravy train for them all, at our cost.