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Are you a little annoyed at turning up to auctions and having to pay ridiculous prices for a start in the market?

 

Ever wondered why house prices have just exploded?

Have a look at the most recent Housing Prices for all states, courtesy of APM.

 median housing prices rise

 

The Centre for Independent Studies (CIS) report that the strong house prices are a result of the strong fundamentals and government policies that focuses on producing demand for houses without addressing the supply barriers. What this means is that the government are not adequately encouraging the builders to build new houses, and to make this affordable to new buyers.

 

According to CIS, Land supply declined by an average of 21% across all Australia’s largest cities in the past decade, pushing prices up by an average 148% to $504.00 per square metre.

 

The old story – restricts supply of anything and the demand and price rise exponentially!!

 

Add to the mix the foreign investors, cuts to the First Home Grants, and supply will be restricted. The population is growing, and if the government makes measures to increase supply, the same circumstances with housing prices will occur.

 

So what is the government doing to address this?

 

In the report Eight Housing Affordability Myths” by the CIS, the report called for a sweeping overhaul of zoning, planning, and building approval processes to reduce the direct and indirect costs of new dwelling constructions, to increase land use intensity and accelerate new land releases.

 

The government needs to shift their focus on reducing tax and regulatory barriers to new dwelling supply – reduce stamp duty and capital gains tax on housing transactions.

 

Mr. Kirchner from the CIS Report has been quoted as saying “The most effective way to increase housing affordability for first home buyers and other buyer and renters is to ensure a plentiful supply of new dwellings to reduce upward pressure on prices”

 

Well said!!