Key Points noted from Ross Gittins ‘Beware of Pedlars of Supply Side Solutions to Home Affordability’


-homes are assets that last for decades; most value is in the land which goes on forever

-the number of homes has kept pace with population growth in recent decades;  a shortage of places to live can’t explain rising house prices

.2 reasons for buying a home: a place to live and as an investment

-Dr Cameron Murray debunks state and local government planning and zoning regulations limit the release of land for housing

.because zoning regulations have been eased in recent years to ensure home building keeps up with population growth

federal government decisions have made home ownership more attractive as an investment*

.first with Hawke Government intro of Capital Gains Tax in 1985; while exempting the Family Home

.the BIGGEST CHANGE with the HOWARD GOVERNMENT 1999 move to taxing full nominal gain at half the marginal tax rate; negatively geared properties took off from that time 

*ASK yourself what happens when some homeowners decide to own more than one home, maybe many more?

-they use superior borrowing power to outbid other home owners *

-every home is different because:  2 houses of the same design may be in different suburbs; some in prime positions

-the cheaper it is to borrow the more will bid prices higher to get the house they want

governments use high immigration to increase the size of cities; more competition to buy a detached house; the more people pay for a home close to the CBD

-Ever-rising house prices is a demand story more than a supply story