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HIA, Australian Consumers Association and real estate consumer advocate disagree about why there are problems in the housing market.

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Friday 1 August 2003

HIA, Australian Consumers Association and real estate consumer advocate disagree about why there are problems in the housing market


MARK COLVIN: With houses and apartments less affordable in much of the country than they have been in a decade or more, the Federal Government is on the verge of announcing a fresh inquiry into property prices. 


The Productivity Commission inquiry is expected to focus on fees, taxes and charges, and restrictions on the release of new land. Meanwhile, State and Commonwealth ministers today failed to reach agreement on scams which are convincing the gullible to pay over the odds for investment property. 


Finance Correspondent Stephen Long reports. 


STEPHEN LONG: Just two months the Prime Minister's Home Ownership Taskforce released its report on how to extend the so-called 'Australian dream' to more people. That report was prepared by John Howard's favoured think tank, the Menzies Research Centre. 


Now, the Prime Minister's about to announce a fresh inquiry into home price affordability headed by the Productivity Commission. The impetus came in the form of research for the Housing Industry Association showing home price affordability is at its lowest point in 13 years, and at record lows in Sydney. 


Simon Tennent is the Chief Economist at the HIA and he says the root of the problem is clear. 


SIMON TENNENT: The most crucial thing that must be done to improve the affordability of housing for first home buyers is not to be giving them more money, it's really got to be coming from the other side. 


We need to be looking at the supply side of the equation, we need to be looking at the availability of land, we need to be looking at making housing more affordable by not having so many fees, taxes and charges and multiple taxation of housing and obviously there's some gains to be made with the levying of stamp duty and also GST. 


STEPHEN LONG: But others aren't convinced the problem is lack of supply. Catherine Wolthuizen is the Finance Policy Officer at the Australian Consumers Association and she believes the inquiry should look at many raft of tax concessions for investment property, which have helped to create a booming market. 


CATHERINE WOLTHUIZEN: In ACA's view, the first step has to be to take the property investors out of that market. It's their ability to use the equity in their existing homes to gear into property investment and take advantage of all the tax concessions available that have forced prices up and of course, forced prospective home buyers out of the market. 


STEPHEN LONG: Meanwhile, Commonwealth and State Ministers met today to discuss how to regulate the boom in property advice scams. The States and the Commonwealth agree on what has to be done. 


The consensus is property advisors should be licensed and forced to declare any secret commissions or kickbacks that they get from developers. But the two sides are at odds on who should take responsibility, so in the absence of agreement, the issue's been sent off to a working party, which will report in March. 


It's an outcome that bitterly disappoints people who deal with the fallout from property scams, such as real estate consumer advocate Neil Jenman. 


NEIL JENMAN: I think it's just buck-passing again. What we've got is the Federal Government is blaming the states, the states blaming the Federal Government, when in actual fact we already have existing laws that can protect these people and to put it off until March next year, just means that more and more victims are going to be saying please, please, help me, help me. 


I'm getting calls and emails constantly from people that are actually telling me, consumers, they call one department, they get sent to another department, backwards and forwards, bouncing around. Meanwhile, these property predators are getting a free ride. It's just amazing what they get away with. 


STEPHEN LONG: The Commonwealth believes it's an area of state responsibility and it wants the states to agree to nationally consistent laws. But along with the Australian Consumers Association, Neil Jenman says the power should rest with the Australian Securities and Investments Commission. But ASIC says it lacks jurisdiction to deal with the property industry. 


MARK COLVIN: Finance Correspondent Stephen Long.