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Academic believes recent lower house prices do not mean the end of the housing affordability crisis.

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Thursday, 16 September 2004



TONY EASTLEY: At the beginning of the election campaign the coalition raised the spectre of high interest rates on home mortgages under a Labor government, but since then there’s been very little said by either party on the actual affordability of housing. But that may be set to change. Here’s finance correspondent, Stephen Long.


STEPHEN LONG: The gavel’s falling a lot less often these days, and house prices have receded from the record highs of recent times. But Professor Julian Disney of the University of New South Wales, Chair of the recent National Housing Summit, says that doesn’t spell the end of a crisis of housing affordability.


JULIAN DISNEY: Prices are now about double what they were 10 years ago, so to get back to the levels of affordability of a few years ago we need huge falls.


STEPHEN LONG: Falls in the order of 50 per cent, which no-one wants to see.


JULIAN DISNEY: That would be too big a drop, but we definitely need to, over the longer term, start a reduction in house prices. They’ve gone way beyond what the fundamentals justify.


STEPHEN LONG: To that end, the ACTU, the Australian Council of Social Service and the Housing Industry Association will today issue a joint call for action. They want a series of measures to make it easier for people of modest means to buy or rent a home—first and foremost a big increase in money for public or social housing for people on low incomes.


JULIAN DISNEY: At least initially $500 million to boost low-income rental housing. That would be public money but much of it would also be attracting through subsidising private investment in the area.


STEPHEN LONG: Labor has committed to spend close to $400 million to create affordable housing for the poor but the government is yet to state its position. Unions, welfare groups and the housing industry also want investment in the public infrastructure needed to make new housing estates viable.


JULIAN DISNEY: More investment in hospitals, more investment in schools and in universities and in research facilities, more investment in public transport, more investment in aged care homes which we’re going to need much more substantially in the future. Some of the problems that concern many people about urban sprawl and about the need for people now to not be able to settle in the major cities at all would be reduced if the infrastructure investment around them was better.


STEPHEN LONG: Then there’s the elephant in the living room that Labor and the coalition refuse to see—the way tax breaks on property have pushed up prices. Julian Disney says that if politicians aren’t willing to scrap negative gearing they could at least consider redirecting the tax break to affordable housing.


TONY EASTLEY: Stephen Long reporting.