Today, the Housing Industry Association (HIA) has issued a Media Release pleading for urgent action on housing policy:
The Housing Industry Association (HIA) has today launched its 2013 federal election policy platform, titled Housing Australians.
The compendium of 50 actions is directed towards reinvigorating the Australian residential building industry and addressing the housing affordability challenge facing the nation.“The simple fact is that Australia is falling behind in housing its population,” said HIA Managing Director Shane Goodwin.
“We are currently building 25,000 homes less than we were ten years ago, and last year built around 10% under average over the past decade.”
“With the population exceeding 23 million in recent weeks, the logical question is where will the growing population live?”
“There has been significant policy focus on health and education as part of the election debate – and this is a good thing – but basic shelter is the bedrock on which all other aspects of our lives are built.”
“Housing must be given a higher priority by the major parties to reflect the social and economic importance it has in our lives.”
“At present home building is being choked by red tape, an inflexible industrial relations system and a disproportionate level of taxation.”
“We are therefore encouraging anyone with an interest in improving housing affordability and protecting the one million plus jobs in building construction to join us in urging the future government to make housing policy a priority,” concluded Mr Goodwin.
I have some sympathy for the HIA’s position. A quick examination of housing construction data does indeed show a minimal supply response to both rapidly rising prices (between 1996 and 2010) and population growth (since the mid-2000s):
Meanwhile, vacant land prices have indeed been forced-up across the nation, which has priced many would-be home buyers out of the new home market (see next chart).
While increasing taxes and red tape (excessive planning approval processes) have undoubtedly played a big role in increasing land prices and development costs, they are only part of the problem. Added to the mix are blunt restrictions on available developable land (e.g. growth boundaries and restrictive zoning), which reduces competition and contestability in the land market (further pushing-up its cost), as well as inadequate funding and provision of housing-related infrastructure, which reduces the amount of zoned land actually able to be developed as well as the cost of development.
The answers to Australia’s housing supply problems are there for all to see. My first recommendation would be for Australia’s various levels of government to undertake a study tour of the USA’s affordable housing markets, beginning with Houston, and adapt their policies to suit local Australian conditions.
