Own goal housing policy

Letter to the Editor

Treasurer Jim Chalmers, in his Budget speech stated: “And we’re easing pressure on the housing market by banning foreign investors from buying established homes, and cracking down on foreign land banking as well."

Foreign investors have been prohibited from buying established homes since 1975.

Regardless, politicians continue to blame investors, foreigners and foreign investors for the shortage of housing in Australia. But the cause of the shortage is government policies such as that announced in last night's budget.

The Foreign Acquisitions and Takeovers Act 1975 prohibits foreign investors from purchasing established homes in Australia [including Alice Springs] without prior written consent from the Australian Treasurer.

One in 10 detached housing built in Australia are build by an overseas owned builder. These global home builders bring to Australia an investment in leading edge building technologies and products.

Penalising these businesses and making it harder for them to build new homes in Australia can only lead to fewer new homes being built.

These global builders are responsible for building thousands of "spec homes" every year where they buy greenfields land and build a home that is then sold.

Prohibiting them from purchasing land adds further complexity and costs to delivering a new home to market.

The underlying cause of the shortage of housing is too much government involvement in the market, and the solution to increasing supply is less government red tape.

If the problem the Treasurer is seeking to address is international students buying established homes then policies should be targeted at this problem, not at penalising some of the world's largest home builders.

Since 2015, a range of punitive taxes have been imposed on foreign investors by State and Federal Governments. The consequence of this is that these investors have withdrawn from the Australian market, and this is a key reason why the volume of apartments commencing construction is now almost half of what it was in 2016.

Penalising overseas owned builders from building homes in Australia will make the goal of 1.2 million homes harder.

Foreign investors build new homes, they don’t live in them and cannot take them out of the country.

Tim Reardon, Chief Economist, Housing Industry Association Image: Home Construction.