Australia faces property crash – taking the economy with it – if luck doesn’t hold, Professor Steve Keen


Australia faces property crash - taking the economy with it - if luck doesn't hold, Professor Steve Keen

Australia has set itself up for a classic property crash – and potentially take the economy with it – if our luck doesn’t hold, the expatriate Professor Steve Keen has forecast.

Chinese buyers had given Australia’s debt-booze-addled gamblers a possible out.

“Australians are now gambling on whether the fallout from China’s crash will prick their own bubble, or inflate it once more,” he suggested.

“In everywhere but Australia, I’m famous for predicting the 2008 crash,” the UK based former Sydney professor told his recent Irish audience ahead of a conference next month.

“In Australia, I’m famous for being wrong about house prices – they rose after the crash, when I expected them to fall.”

He says he partly got the cause right, but the direction of the cause wrong with his 2008 forecast.

“As the Irish know only too well, what really causes house prices to rise rapidly is too much mortgage debt, rising too quickly.

“House prices exploded here in the “Celtic Tiger” days, only to collapse when the mortgage bubble burst – bringing the economy down with it,” he wrote in the Irish Independent.

Keen wrote that Australians avoided the nasty hangover “by the classic Antipodean method: they went for the ‘Hair of the Dog’ cure.

“Whereas the rest of the world unwound its mortgage debt, Australians piled into it – first in 2008 when the government turbocharged the market by doubling the grant it gave to first-home buyers, and then since 2012 when falling interest rates encouraged Baby Boomers to throw their so-called retirement savings into the housing market casino.

he said the Australian hangover cure worked, but at the expense of mortgaging Australia to the hilt.

When the crisis hit in 2008, Australian mortgage debt was already higher than in the USA: mortgage debt peaked at 72pc of GDP in America then, but Australia’s level was 10pc higher again.

“Today, mortgage debt in the USA has fallen to 53pc of GDP-what wimps!

“The hard-drinking Australians now have a mortgage debt level of 91pc of GDP and rising.”

“As any fan of the ‘Hair of the Dog’ cure knows, it only works if you keep drinking.

“So can Australians maintain their record for insobriety and keep imbibing from the Bar of the Banks?

Left to their own devices, I have little doubt that my ex-countrymen could keep knocking back the 4X of mortgage debt forever.

But as ‘Hair of the Dog’ devotees also know, one danger of this cure is that the bartender will eventually refuse to serve you.

“And that seems to be happening in Australia now ….with the policeman (the “Australian Prudential Regulation Authority”) finally awoken from his slumber, and is now insisting on less alcohol in the brew-otherwise known as a lower loan to valuation ratio.

Kenn says these moves seem to be have blown the froth off the Australian market.

In the boom days, more than 80pc of properties were sold at auction, and frequently for well over their reserves.

Steve Keen noted the auction clearance rate appears to be heading further south.

“Prices are still rising, but the rate of price increase has slowed.

As fans of rugby will appreciate, Australians can win on luck as well as talent.

“But it’s only luck now that is keeping Australia from tasting the bitter brew that Ireland was forced to sip when the myth of the Celtic Tiger was exposed as a debt-drunkard’s delusion.

“Australia has set itself up for a classic “Marsupial Tiger” crash.

“As the growth rate of mortgage debt slows, the market will come down and potentially take the economy with it.

“But Australians are relying on their other secret weapon: luck.

“Chinese buying of Australian real estate-partly as insurance against things going bad in China, partly to buy blue skies, which can’t be bought in China for love nor money – has given Australia’s debt-booze-addled gamblers a possible way to walk away from it all and appear sober rather than sozzled.

“However, China itself is going through its own property market crash, and there’s no external force that will rescue its speculators from that fate.

“So Australians are now gambling on whether the fallout from China’s crash will prick their own bubble, or inflate it once more.”

Professor Steve Keen is just one of the many big names from the world of economics appearing at Kilkenomics, called Davos with jokes, in two weeks’ time.

Interest rates usually are irrelevant: Terry Ryder


Interest rates usually are irrelevant: Terry Ryder

Media coverage of the Westpac decision to lift mortgage rates 0.2 percentage points has been typically sub-standard.

Many articles, inspired by economists suffering from limelight deficit syndrome, have portrayed this as a death knell for property markets.

As someone who has studied the relationship between interest rates and price movements, I can tell you that this is a not a reasonable conclusion.

Economists and journalists, with their simplistic thought processes, tend to believe that low interest rates = property boom, and rising interest rates = property decline. This contradicts both common sense and historical precedent.

Falling interest rates usually coincide with subdued property markets. The RBA cuts interest rates when the economy is struggling, consumer confidence is low and unemployment is rising – i.e. conditions which are least likely to produce property booms.

This is why most of Australia does not have booming property markets. Only Sydney, which is the centre of the one economy (NSW) that is really pumping, has had a boom. Melbourne, the capital of a state with an okay economy, has displayed some buoyancy but nothing approaching the dizzy heights of Sydney.

Most of the state and territories have struggling economies and their capital city property markets – Perth, Hobart, Canberra, Darwin, Adelaide – have been stuck in neutral or reverse. Years of very low interest rates have been utterly irrelevant in all of these places.

Regional Australia is dotted with markets that have dropped sharply and others that have gone nowhere in terms of price movements. The exceptions are relatively few and most of them are located amid that one strong state economy, New South Wales.

The bottom line is that interest rates usually are irrelevant. Economists appear to think they’re the only thing that matters and the sole determinant of outcomes in real estate. In truth, they have little or no bearing.

Other factors have much greater influence. Sydney had its boom because a change of State Government in 2011 returned sanity and competence to governance, the economy started pumping again and infrastructure spending was revitalised. Money started circulating, businesses started spending, consumers started feeling good about things and the property market, which had been largely dormant for a decade, burst to life.

It would have happened whether the official interest rate was 2%, 4% or 6%.

Conversely, interest rates are most likely to be rising when the national economy is strong, with lots of jobs being created, confidence high and businesses spending big. These are the conditions that drive property booms – and the RBA will lift interest rates to dampen things down.

Often it requires a long period of multiple rises to quell the buoyancy. Therefore, genuine national property booms – unlike what we have at the moment – usually coincide with periods of high or rising rates.

In the late 1980s, interest rates were lifted repeatedly without dampening the boom – and mortgage rates went as high as 17% before the bull run ended.

To suggest that a 0.2 percentage point rise by one lender will kill the (Sydney) boom shows a low level of understanding.

The reality is that the one major boom in the nation, Sydney’s, has been slowly deflating since the start of the year. APRA didn’t need to take action because the market was taking care of the situation without any interference from self-important bureaucrats.

And Westpac’s tiny nudge to interest rates will have no bearing on the situation.

Sydney’s booming residential property market was nearing peak: John Symond


Sydney's booming residential property market was nearing peak: John Symond

Aussie Home Loans chief John Symond has forecast that Sydney’s booming residential property market was nearing its peak.

But he quickly added he thinks “there’s buckley’s chance of a price correction.”

He told the 7th annual Citi Australia & New Zealand investment conference yesterday he could see Sydney markets “getting trickier suburb by suburb.”

“But the good news is that steam is coming out of the market and sanity’s coming in.

“I think we’re going to see a more flat market,” he said.

“Hot areas will still see a seven to nine percent gain, in other areas you might see a three to four percent, some other areas a five percent drop,” he anticipated.

“You have to do your homework.”

His comments came as the CBA joined Westpac in increasing home loan interest rates with CBA’s rate increase of 0.15% pushing up its package loan rate to 5.10%.

The veteran mortgage broker expected all four big banks would raise rates in response to APRA’s capital requirements.

“If all four come out I think that will force the Reserve Bank to drop rates another 25 bps, so that consumers feel their real interest rates haven’t gone up,” he said.

But with big banks poaching customers from other big banks to get some loan book growth, he said Australian borrowers “have never had it better in my 40 years.

Except for Sydney and Melbourne, the rest of Australia had not had the property boom, he said.

“You’ve got to remember between 2002 and 2012, Sydney was the worst-performing capital city in Australia – 2.2% growth per annum before inflation.

“All of a sudden, we’re seeing 15-18% growth in the last three years driven by lowest interest rates in Australia’s history and a surge in foreign demand, particularly Chinese.

“They are driving a lot of the prices in places like Sydney or Melbourne.

He said for a collapse there either had to be a sharp increase in interest rates and “there’s no hope of that happening for some years, or unemployment picking up.”

“I think we are approaching the top of the market.

“Different suburbs, in my opinion, will perform differently going forward,” he said, adding there was a risk in off the plan were too many new apartments hit the market.

“Prices are levelling out and in certain suburbs I can see prices dipping a bit but certainly no collapse in prices because the appetite to own real estate is so great in this country.”

“I think the price increases will abate, I think, by the middle of next year when it will be a buyer’s market,” he said.

Dural Woolworths store offers old fashioned net lease


Dural Woolworths store offers old fashioned net lease

The Woolworths supermarket at Dural is up for auction through Burgess Rawson on October 29.

The 508 Old Northern Road store is currently on a 20-year lease to 2023 with options to 2053.

Located in Sydney’s north western growth corridor, the supermarket is spread across 4,356 square metres.

Its annual rent is $1,102,900.

It has 200 car parks.

The tenant pays all outgoings, including land tax as per lease.

The property has been listed through Graeme Watson and Simon Staddon.

The agents noted this was a supermarket on an “old fashioned net lease,” with the tenant paying outgoings that neither Coles nor Woolworths no longer agree to.

“The strong trading Woolworths supermarket is located in the heart of Dural, one of Sydney’s affluent suburbs,” Graeme Watson said.

“The presents not only as a rare investment opportunity but also a secure one” he said.

Set 32kms from the centre of Sydney, it adjoins Dural Mall, a shopping centre with numerous specialty shops, all adding to Dural’s strong overall customer draw.

Itis expected to sell at circa $17,000,000 reflecting a yield in the order of 6.5%.

The property will be auctioned at Sydney’s Sofitel Wentworth Hotel as part of Burgess Rawson’s Investment Portfolio Auction 100.

Late last year, Burgess Rawson sold off a Woolworths supermarket in rural Gloucester, NSW for $9.88 million on a 5.88 per cent net yield.

Supreme Court punishes agency for ‘unscrupulous behaviour’

imagesReal estate businesses have been warned they face serious consequences if they exceed the limits of the advice they can provide.

Following ASIC action, the Supreme Court of NSW found that Park Trent Properties Group unlawfully carried on a financial services business for more than five years by providing advice to clients to purchase investment properties through an SMSF.

The Wollongong business promotes itself as a “full service real estate company” that offers sales services, property management and investment advice.

ASIC said that Park Trent had advised more than 860 consumers to establish and switch funds into an SMSF by the time the trial started in June 2015.

In his judgement, acting justice Ronald Sackville said that Park Trent’s business model depended on “persuading relatively unsophisticated investors of the virtues of using their superannuation accounts to purchase investment properties and to establish SMSFs”.

“Investors were influenced to make important decisions concerning their superannuation strategy with little or no genuine consideration of whether the decision took proper account of their individual financial circumstances. Some suffered financial loss as a consequence,” he said.

Acting Justice Sackville said his decision “serves as a warning” to real estate businesses that seek to influence clients to establish SMSFs for investment purposes without having the necessary licence to do so.

ASIC deputy chairman Peter Kell said agencies that engage in such conduct are breaking the law.

“This outcome demonstrates the courts, ASIC and the public will not tolerate this type of unscrupulous behaviour,” he said.

“ASIC’s message is that anyone recommending or facilitating SMSFs as a way of investing in property will need to have a licence and provide appropriate advice that prioritises the client’s interests,” Mr Kell added.

“It is important that advisers who deal with SMSFs are appropriately licensed because the important safeguards and standards that come with being licensed are in place for a sector which is of growing importance to more Australian investors.”

Park Trent and ASIC have until 29 October to file submissions regarding the form of final orders.

According to Park Trent’s website, the company has 10 offices nationwide and has joint venture operations in China, New Zealand, the UK and the UAE.

Property market risks rising: HSBC’s Paul Bloxham


Property market risks rising: HSBC's Paul Bloxham


Today’s RBA semi-annual financial stability review focused on increasing risks in Australia’s property market.

On housing, the RBA noted some tentative signs that market activity was pulling back in Sydney and Melbourne, from rapid rates of growth, which is positive. At the same time, they suggested that recent lending standards had been weaker than had been previously thought and that the Melbourne and Brisbane apartment markets look to be over-supplied.

On commercial property, they re-iterated concerns that prices are rising much faster than rents. In our view, a further RBA rate cut, as the market is pricing, seems unlikely in an environment of already ‘frothy’ property markets.


The RBA noted that ‘recent investigations by regulators had revealed that housing lending standards in recent years have been somewhat weaker than had originally been thought’.

They noted that ‘while the housing market remains a long way from oversupply nationwide, some geographic areas appear to be reaching that point, particularly inner-city areas of Melbourne and Brisbane’.

They noted that ‘many existing borrowers also continue … to pay down their mortgages faster than required’ and that ‘aggregate mortgage buffers remain around 16% of outstanding loan balances, equivalent to more than two years of scheduled repayments’.

They noted that ‘risks are rising in the commercial property sector’ with ‘oversupply evident in the Perth and Brisbane office markets’.


The property market has been a keen focus of RBA observers recently. Some are arguing that the signs of slowdown in housing price growth and construction may mean the RBA needs to cut interest rates further to maintain growth momentum in the economy. In contrast, we still see the RBA as more worried about excessive property market exuberance than the modest pullback we have seen recently.

Today’s semi-annual financial stability review sheds some light on the RBA’s own view of the property market situation. First, they note that, although there are some ‘tentative’ signs of some slowing in the Sydney and Melbourne housing markets, demand remains strong in these markets (prices are still rising at 17% and 14% annually). Second, they noted that the upswing in housing construction is starting to lead to pockets of oversupply of housing, in the Melbourne and Brisbane apartment markets, although they suggested that the nationwide housing market is a long way from oversupply.

Finally, they suggested that although lending standards have been tightening, as the prudential regulator has been turning up the dial on its micro-prudential settings, it appears that the starting point was that lending standards were looser than had been previously thought.

In our view, the RBA still seems more concerned about making sure that financial conditions and lending standards are tighter in the housing market, rather than being concerned about needing to deliver more stimulus.

In this regard, the recent increase in effective mortgage rates (as a result of a lift in mortgage rates by a major bank), partly in response to the authority’s requirement that banks hold more capital, may not be as much of a surprise to the central bank as the market has been suggesting.

Keep in mind that, for some time, the RBA’s challenge has been that it wanted to maintain loose financial conditions to support the rebalancing of growth, but has been increasingly worried that very low interest rates could over-inflate parts of the housing market. A modest lift in effective mortgage rates, combined with continued low business lending rates and a lower AUD may, in fact, be closer to the ideal policy setting at the moment.

On commercial property, the RBA noted increasing concerns about the gap that is opening up between prices and rents. Much like in housing, the risk that is building up appears to be geographically concentrated. In particular, the central bank noted that oversupply is evident in the Perth and Brisbane office markets. Office vacancy rates are rising to quite high levels in these cities and these are the areas most exposed to the mining downturn. In contrast, vacancy rates are lower in Sydney and falling in Melbourne.

Overall, the RBA stated that the Australian banking system faces ‘heightened, but manageable, risk’ but it is clear that having interest rates at low levels for a long time may be starting to create some unwanted problems.

RBA Bullish on Economy

 A publication of Ryder Research Resources Pty Ltd

RBAReserve Bank deputy governor Philip Lowe gave an upbeat assessment of the economy this week. He said it was strong enough to resist any downturn pressures and flexible enough to adapt to the changing world. “My central message is that these fundamentals are strong and that they provide us with the basis to be optimistic about the future,” he told a business conference.

Dr Lowe said the weaker dollar has helped the economy deal with global shocks, such as the recent fall in commodity prices. “The depreciation over the past couple of years is playing an important role in helping the economy adjust to the wind-down of the boom in mining investment,” he said.

The weaker currency makes locally-produced good and services more competitive with dearer imports, which gives a boost to local tourism, retailers and manufacturing.

Dr Lowe said Australia’s links with Asia would keep the economy strong, not just through mining and resources exports but also though agriculture. “As average incomes in Asia grow, so too does the demand for protein,” he said. “With our large tracts of agricultural land and the expertise built up from using that land over many decades, Australia has obvious advantages here.”

The end is nigh for Sydney’s property boom: Terry Ryder


The end is nigh for Sydney's property boom: Terry Ryder

Sydney home owners can feel confident that their property values will hold up amid the gradual wind-down of the price boom.

There are two reasons. One is that economists are predicting values will fall. Given their track record of getting it wrong on real estate, we can be fairly sure values won’t decline.

The other reason is the historic precedent. Sydney has had big price booms before and when the bull run ended, there was no decline in values. Prices simply stopped growing.

I fully agree with the growing list of pundits calling the end to Sydney’s boom. I’ve been writing about it for the past 5-6 months.

On 21 May I wrote in this column: “It was inevitable that Sydney would run out of puff eventually and the most likely time for it to happen was in the third year of price growth – which means some time this year. It’s rare for major markets to sustain a boom for any longer than that.

“I’ve just finished the research for the latest edition of The Price Predictor Index, examining market activity in suburbs and towns across the nation, and it indicates Sydney has begun a gradual fade.”

That view was subsequently confirmed by sales figures for the June Quarter, which continued the pattern seen in the March Quarter figures. It’s clear now that, in terms of sales activity, Sydney peaked in the December Quarter last year and has been on a gradual fade ever since.

But does this mean prices will collapse? Not if 2004 is any guide.

The preceding 2-3 years represent the last time Australia had a genuine national property boom. In 2002, six of the eight capital cities recorded double-digit growth in median house prices, including three (Sydney, Brisbane and Adelaide) where prices grew more than 20%. The national average rise was 18%, double the average rise in the past 12 months.

The following year was even more prolific. In 2003, all eight capital cities recorded growth of at least 13%. Five of capital cities grew more than 20% and the city average that year was a 19% rise.

The past 12 months, in comparison to those stellar years, have been rather tame, with only Sydney recording double-digit growth (although some research sources have Melbourne nudging above 10%). Media hysteria suggesting we have been in the midst of an unprecedented national boom lately is quite ludicrous when we consider the 2002-2003 scenario.

 The bottom line, however, is this: by 2004 the boom had run out of steam. Economists, journalists and other pontificators were routinely predicting a collapse in prices. But it didn’t happen. The growth subsided but there was no price decline.

Earlier this year I conducted a research exercise for a client, examining media coverage of real estate since the beginning of the 21st Century and comparing it to actual outcomes.

This revealed that reports of bubbles, unsustainably high property values and inevitable price collapse have occurred constantly in Australian media over the past 15 years.

Every economist complaining that property prices should fall because they don’t comply with their theory about where prices should be has been given airplay.

Every overseas spruiker seeking to drum up attention for a book launch or a seminar tour has gained massive publicity by forecasting that our property values were about to decline 40%, 50% or 60%. One was silly enough to predict a 90% drop in land values and media was silly enough to publish it.

None of them was right. Despite that relentless production line of doomsday headlines stretching across 15 years, there has been no Armageddon in Australian real estate.

So, now the chattering economists are at it again. No matter how many times they get it wrong on real estate, they will continue to step up for another bout of false profiteering.

The boffins at Macquarie Bank have rolled out some very specific forecasts about something they call “Australian property prices”. They’re going to start falling in March next year. And the decline won’t be 5% or 6% or somewhere in the band from 5-10%, it will be exactly and precisely 7.5%.

Will they be proven accurate? Not a chance.

Sale Listings Surge in Sydney

sqm-research-aug-4-logo-breakoutSQM Research Newsletter – Tuesday October 6, 2015 

-With Louis Christopher
SQM Research reports that Sydney residential property listings rose 7.6% during the month of September to stand at 23,533 listings. Year on year, Sydney listings have risen 11.1%, suggesting that there are now more residential property sellers in the market than a year ago.

Nationally, the number of listed properties climbed to 339,026 in September 2015, increasing 1.4% from August 2015, with the number of sale listings remaining largely unchanged to this time last year. A monthly rise in sale listings for September was expected due to the normal spring seasonality historically recorded at this time of year.

Within the last 12 months sale listings for Darwin and to a lesser extentPerth have recorded high yearly growth. Darwin experienced a yearly growth of 22.1%, with sale listings climbing from 1,719 to 2,081. Sale listings in Perth increased from 20,401 this time last year to 23,232 in August 2015, a total yearly growth of 16.3%.

In contrast, year-on-year results indicate that Melbourne and to a lesser extent Hobart experienced excessive yearly falls. Melbourne recorded the biggest yearly change, with listings falling by 16.9%, reducing the number of properties for sale to 35,760. Hobart also recorded yearly falls with records indicating a yearly change of 9.9%.

The Sydney surge in listings is another indicator now suggesting that the Sydney housing market is now slowing. Buyers should now find there is a little more choice out there compared to earlier this year. Yet, I note that asking prices are still higher. I suspect vendors are not quite registering that conditions have changed somewhat since the white hot market of autumn.

The Melbourne result is also interesting in that there was barely any movement at all in listings in September and that stock for sale is well down on this time last year. This is suggestive of a strong housing market that is not slowing down at all.


While listings in Sydney surged, asking prices for Sydney dwellings continued to climb over September, with a total monthly rise of 1.6% for houses and 0.9% for units. The median asking price for a unit has now reached $636,100, while the median house asking price in Sydney is $1,143,300, according to SQM Research.

In contrast, median asking house prices in Canberra recorded yearly falls with a year-on-year comparison showing a 12 month decline of 2.5% for houses, and 0.3% for units. Perth median asking prices continue to record yearly falls, in particular asking prices for houses are down 5.3% over the last 12 months, and 1.7% for units.

Key Points

  • Total online national residential listings climbed during September 2015 to 339,026.
  • This figure represents a rise of 1.4% when compared to the corresponding period of the previous month (August 2015).
  • Sydney recorded the largest monthly fall in stock levels, rising by 7.6% during September 2015 to 23,533.
  • Melbourne recorded the biggest yearly change, with listings falling by 16.9%, reducing the number of properties for sale to 35,760.
  • Sydney median house asking prices continue to rise during September 2015, with the current asking price for a house sitting at $1,143,300.
  • Melbourne recorded the smallest monthly change, with listings up 0.8% over the month of September 2015.

Q&A: What does the Turnbull Government mean for property?

by Sarah Millar 07 OCT 2015

On September 15 Malcolm Turnbull became Australia’s 29th Prime Minister – and its fifth in as many years – after winning a leadership challenge against Tony Abbott.

While the new PM has enjoyed a lift in the polls following the win, many across the country are waiting to see what will happen in the policy space.

Key areas affecting the property industry are tax reform and housing affordability. So what does a change of government mean for the property industry?

What are some key changes in the new government?

With the appointment of Malcolm Turnbull as PM comes a new ministry. Scott Morrison is Treasurer and Jamie Briggs becomes Minister for Cities and the Built Environment – a newly-created portfolio.

“It’s a very strong and capable ministry that the PM has put together,” Housing Industry Association Chief Executive of Industry Policy and Media Graham Wolfe says.

“Arthur Sinodinos and some other people into the senior ministry shows the PM wants to focus on the domestic economy.”

A tale of two suburbs: From Point Piper to The Lodge for Malcolm Turnbull

Forest Lake, QLD

What do the changes mean for property?

It’s no secret that housing plays a major role in both the Australian economy and the lives of all Australians.

Rising prices, particularly in the Sydney and Melbourne markets, have put the question of housing affordability at the forefront of national debate.

Q&A: Is Australia in a housing bubble?

Ken Morrison, Chief Executive of the Property Council of Australia, says there will likely be a greater focus on urban areas, particularly with the appointment of Briggs.

“Malcolm Turnbull comes to the role as perhaps the most urbanist Prime Minister ever,” he says.

“He has deep understanding of the importance of cities in the economy and people’s lives.

“We have now got a PM that is looking at urban demands that perhaps we didn’t have before.”

Malcolm Turnbull has deep understanding of the importance of cities.

Morrison says more than 80% of Australia’s economy in GDP terms comes from cities and analysis by Infrastructure Australia shows that three quarters of Australia’s population growth over the next two decades will be in our four major cities.

“If Sydney, Melbourne, Brisbane and Perth don’t perform … we don’t achieve our economic objectives.”

Buderim, Queensland

What will be the key areas of focus?

Morrison says the debate that will have the biggest impact on property is the issue of tax reform.

“The tax reform debate is one people who are focused on the property market should follow closely.”

Figures show that 9% of Australia’s total tax take comes from real estate, compared with the OECD average of just 5%, he says.

“What we are talking about is national tax reform and focusing on changes that can grow the economy,” Morrison says.

“We need to start to do something about the taxes that everyone agrees are the worst.”

Brighton, Adelaide, SA


He names stamp duty as one of the worst of Australia’s national taxes, saying it disrupts the decision making of millions of Australians who put off selling or moving because of the tax.

“That locks them into housing that is not necessarily appropriate and a whole bunch of economic activity doesn’t happen.

“The challenge for tax reform is to find a pathway to phase out stamp duty.”

Q&A: Should stamp duty be axed?

The challenge for tax reform is to find a pathway to phase out stamp duty.

The other big issue is in infrastructure, an area where both Wolfe and Morrison say there needs to be significant investment.

“We need to ensure significant investment in infrastructure to support housing, … and the provision of transport to provide for those people,” Wolfe says.

Morrison agrees and says the PM’s move to scrap a ban on federal government investment in public transport infrastructure is a welcome one.

What about housing affordability?

Wolfe says the new treasurer brings with him a solid understanding of the property landscape and affordability issues. Prior to being appointed as Treasurer, Scott Morrison held the position of Minister for Social Services.

“Scott Morrison is on the record as having a certain view on house prices and affordability and what impacts on that. He realises that one to two years of record building will not keep up with the level of undersupply we have seen,” Wolfe says.

He says without continued building there will be increased pressure on rental prices and availability and on affordability more generally.

“We would have liked to see a minister for housing, but we know they can traditionally spend a lot of time dealing with social issues,” Wolfe says.

“I think the inclusion of Arthur Sinodinos as Cabinet Secretary is key in that space.”

We would have liked to see a minister for housing.

Q&A: Is negative gearing good or bad?

Cherrybrook, NSW


Ken Morrison agrees, saying a key part of the affordability debate centres on housing supply.

“We have been fortunate over the past year the housing construction levels have risen,” he says.

“We need construction levels to stay high to eat into big supply issue in cities, especially in Sydney.

“It’s high school economics – if you have demand without supply then prices are only going to go one way.”