Tuesday, 16 August 2022

Housing affordability

Mr QUILTY (Northern Victoria) (19:55): (2052) My adjournment matter is for the Minister for Housing. The government’s affordable housing strategy appears to come in only two flavours—the taxpayer pays for housing or the government forces a portion of new housing developments to be cheaper. Both of these strategies are abject failures that will result only in ever-increasing housing costs, more affordability problems and a vicious circle of increasing government control over our homes. The reason housing is so expensive is that there are too few houses being built in the places where people want to live. That is it. All the other stuff—mean landlords, greedy developers, lack of social housing, rising mortgage costs, investment properties, foreign investment and whatever else—is effects caused by a shortage of housing supply.

This housing shortage is caused by restrictions placed on land and construction preventing new houses being built. Density limits, zoning, building standards, licensing, council rejection, community objection, environmental compliance, community amenity requirements, green space offsets, developer contributions, rental restrictions and stamp duty all work together to strangle the supply of new housing. With too many people and not enough housing the natural market response is for prices to rise. That is why we are here now. Having the taxpayer pay for a portion of the heavily restricted supply of new housing will not help much, because it does not address the root issue that is restricting supply. It also makes individual taxpayers poorer unless they are able to afford their own housing, so we are essentially taking housing from people who would otherwise just be able to afford it and giving it to someone who cannot. This is almost the same thing as rationing.

The other policy, which is to force a portion of new builds to be cheaper, is even worse. This policy does nothing to increase the number of houses being built; it takes some nice new houses and deliberately makes them worse so the developer will not charge as much for them. This policy is even worse than rationing. The minister needs to take a few lessons in economics 101, familiarise himself with the supply and demand chart and then apply what he has learned to the housing market. You cannot fix the restricted supply problem with further restrictions and rationing. The incentives of the current system work to continually ratchet up house prices.

Governments love restricting supply because rising prices mean they collect more stamp duty. Home owners—voters—love restricting supply because it increases the value of their property. They have got no incentive to allow new construction around them and every incentive to object to high density and reduced amenity. Almost all members in this place are property owners. We all gain as house prices rise. The best way to guarantee that is with policies that restrict supply of new housing in the market. This is a toxic incentive structure that ensures the problems in the housing market will never be addressed. We must reject this selfish nimby mentality and do what is best for everyone. The action I seek is for the minister to adopt a new housing strategy, one that focuses only on removing the barriers that restrict supply of new land and housing construction.