The Greens’ terrible economic illiteracy was skewered this week after their call for a national freeze on rents.
It sounds like a great idea on the surface. There is no more pressing problem in Australia than our rental crisis. Every day it seems there’s a media story about an Australian family facing homelessness.
However like all ideas from the Greens, a national rent freeze will only make this crisis worse.
Seventy percent of Australian landlords own only a single investment property. Most of them have worked hard and sacrificed much to invest in a rental property to supplement their income into retirement. While Labor and the Greens view them as greedy property tycoons, they are anything but.
Rents are certainly going up, but then so are the costs on landlords like insurance, council rates and state government taxes. Property investors are also facing increasing costly regulation that effectively takes away their rights. The Palazsczuk government is even taxing Queensland investors on the value of property they might own in other states.
This is driving people out of the market. There are many other ways to invest their money, for example entering the lucrative short-term holiday accommodation market. This means there are even less homes available for rent.
Our rental crisis is primarily one of very short supply. Australia has the lowest proportion of dwellings per population in the developed world, because for at least a decade home construction has not kept pace with population growth. Demand is only going to intensify as the Albanese government floods Australia with more than 200,000 new immigrants every year.
Increasing the supply of rental accommodation needs to be the priority, and one surefire way to do this is to ban foreign ownership of all residential property in Australia while putting in place policy settings which encourage, rather than discourage, property investment by Australian families.
Agencies and vendors should be required to sight evidence of Australian citizenship or permanent residency for a sale to go ahead. Lowering immigration to more sustainable levels would also help reduce demand. Councils need to get their act together too, releasing land more quickly and reducing red and green tape.
And we need to have a hard look at state and territory government fees and charges, particularly stamp duty. When the Goods and Services Tax (GST) was introduced, we were told the revenue would replace what the states and territories derived from such charges. That didn’t happen, and today those fees and charges can make up to 40% of the total costs of purchasing a property.
As always, fixing our various crises – the rising cost of living, housing, health, energy, workers and skills – can be achieved by putting Australia and Australians first.