From one of Australia’s biggest property rentiers, Harry Triguboff, comes more twisted logic, with Triguboff appearing before the House of Representatives inquiry into foreign ownership to on the one hand admit that housing affordability has gotten so bad that parents need to help their children enter the property market:
Parents should understand they need to mortgage their homes to help their children get into the property market, Harry Triguboff says.
…young buyers should ask their parents to help them finance property purchases.
While on the other, arguing that foreign property purchases helps those priced-out of buying property:
…but offshore buying activity works in favour of local residents by boosting housing supply, Mr Triguboff said.
“When foreigners invest here, then maybe some people are priced out, correct. But people are given places they can rent, so even though foreigners don’t live here . . . it’s a big advantage we get from having them buy.”
To his credit, Triguboff did at least mention that “inefficient planning laws, voluntary planning agreements and local council-enforced bank guarantees” were factors helping to push up house prices, which is correct.
But of course, he failed to mention the impact of Australia’s perverse tax concessions (e.g. negative gearing and capital gains tax discounts), as well as our high tax rates on savings, which have encouraged too much local investment into housing, pricing-out first home buyers in combination with soaring foreign demand.
Nor has Triguboff mentioned that land bankers and property barons are getting an easy ride in Australia, enjoying mammoth capital gains but paying very little tax:
Apartment billionaire Harry Triguboff was surprisingly candid at a lunch held by the American Chamber of Commerce last October.
He told the audience he was able to pay “very little tax”.
“I keep a lot of my properties. And if you keep them and there’s capital gain it’s beautiful,” he says “You don’t pay tax. I don’t lease them so I don’t pay tax on the rent, but I get depreciation.”
He paid tax on apartment sales but that’s where the land banking came in.
“You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.”
Australia’s inflated housing costs and affordability issues will not be fixed by parents helping their children purchase property. This would only add further demand fuel to the housing bonfire.
Rather, a combination of actions are required to reverse policies that have conspired to pump demand and choke supply. These include addressing the myriad of supply-side constraints preventing affordable development, along with the removal of distorting tax concessions preferably in concert with the implementation of a broad-based land tax, as well as the effective monitoring and enforcement of rules precluding foreign citizens from purchasing pre-existing Australian property.