Report into Home Ownership in Australia delivered by CTH Parliamentary Committee

Tuesday 24 January 2017 @ 1.54 p.m. | Legal Research

After the lapsing of Parliament on 9 May 2016, and the lapsing of the previous inquiry into Home Ownership, on 22 November 2016, the Treasurer, The Hon Scott Morrison MP, asked the Standing Committee on Economics to inquire into and report on Home Ownership. That report was delivered on 16 December 2016.

Terms of Reference

The terms of reference for the inquiry were the same as the previous inquiry before it lapsed, namely, that the Committee will inquire into and report on:

  • current rates of home ownership;
  • demand and supply drivers in the housing market;
  • the proportion of investment housing relative to owner-occupied housing;
  • the impact of current tax policy at all levels; and
  • opportunities for reform

The Committee will also give due regard to the aspects of the current Tax White Paper process being conducted by the Government that pertain of housing Australia.

The Inquiry received over 65 submissions in total with 7 public hearings being held in Canberra, Sydney and Melbourne.

Key Findings of the Report

Committee Chair, Mr David Coleman MP, said that a range of views on the challenges facing home buyers were canvassed throughout this inquiry. The key findings of the report include:

  • while demand for housing is strong in Sydney and Melbourne it must be noted this is not the case throughout Australia. Many parts of Australia have a relatively weak housing market;
  • government policy in this area should predominantly focus on boosting dwelling supply in underserved markets;
  • the Committee does not support tax increases on property investment.  Increased rates of capital gains tax, and increases to income tax through the removal of negative gearing are not supported by the committee;
  • the Committee notes that APRA has the capacity to seek to limit the growth of borrowing by property investors, should it deem this to be in the interest of financial stability. APRA acted in this manner in late 2014 and this action is widely regarded as having been successful. It is open to APRA to take additional actions in this area in the future if it deems it to be appropriate.

The Committee’s report also canvasses potential changes to stamp duty and land taxes, and finds that any such change should only be considered as part of an overall review of property taxation.

Mr Coleman said:

“Australia’s property market is not homogeneous – it has very different characteristics in different locations...Government policy is best focused on seeking to increase the level of stock in those markets that are under-supplied at present.  Increasing rates of tax on property investment would have a negative impact on the economy, and is not supported by the committee. It’s notable that APRA has already acted to reduce the rate of borrowing by investors, and has the tools to take further action if it believes this is in the best interests of the economy”.

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