Dire warning over national housing crisis

Australia: So, there’s a big fuss about the housing market right now. Economists are saying that the current tax breaks are really messing things up for renters and first-time buyers.

Over the last 25 years, home ownership has taken a hit, mainly because of things like capital gains discounts and negative gearing. It’s a bit of a mess.

According to some numbers from Money, investor loans are skyrocketing in almost every state, except for Victoria. That state seems to be doing its own thing.

In fact, investor activity is up by 19% annually, while loans for people actually looking to buy homes are only growing by about 5%. It’s a real head-scratcher.

Victoria is the only state where things aren’t going crazy for investors. They’ve got some friendly policies for home buyers and new rental laws that make it tough for landlords to kick out tenants.

Now, Victoria has the highest share of owner-occupiers at 28%, with loans for existing properties jumping by 15%. That’s more than double the national average!

Meanwhile, Western Australia is buzzing with buying activity, leading the pack for loan growth. Owner-occupier loans there are up 9%, and investor loans have shot up by 43%!

In New South Wales, investor loans are climbing by 20% each year, and Queensland isn’t far behind with a 24% increase. It’s wild out there.

Money’s property expert, Mansour Soltani, says what’s happening in NSW is pretty much a reflection of the whole country’s trends.

He mentioned that strong rental demand and rising yields, thanks to overseas migration and property price hikes, are driving investors to the market.

But owner-occupier demand is lagging, likely due to high prices and interest rates making it tough to borrow for bigger loans in NSW.

Maiy Azize from Everybody’s Home pointed out that investors are really pushing renters out of the market.

She said that the rising home prices are making it harder for Australians to buy, and renters are feeling the squeeze too.

“People are struggling with skyrocketing rents,” she noted. “Every extra dollar they have to pay just adds to their stress.”

Azize also highlighted a huge shortfall in social housing, saying the private sector can’t keep up with the demand.

“We need to fix this and make social housing a real option for more Australians, not just a last resort,” she added.

Recently, the International Monetary Fund (IMF) chimed in, urging the government to tackle the housing crisis head-on.

They suggested everything from tax reforms to increasing land supply should be considered. The Albanese government aims to build 1.2 million new homes by 2029, with a hefty budget of over $30 billion.

The Coalition is also pitching in with $5 billion for local infrastructure to help unlock housing projects.

But the IMF believes more needs to be done, like getting rid of state stamp duties and shifting to land taxes to ease the burden.

They warned that Australia’s growing household debt is a big risk for the economy.

“A solid policy package is crucial to tackle the housing affordability crisis,” they said, emphasizing the need for more construction workers and relaxed zoning rules.

They also suggested phasing out tax breaks for investors to create a fairer tax system that supports growth.