Latest / The Front / Labor’s property shake-up is going exactly to plan

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Labor’s property shake-up is going exactly to plan · The Front

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  Speaker 1: From The Australian. Here's what's on the front. I'm Christian,
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  Speaker 1: ami it It's Tuesday, August four, twenty twenty six. Just
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  Speaker 1: fifty five people have been employed through a thirty two
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  Speaker 1: million dollar government program designed to help employers diversify their workforce.
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  Speaker 1: That's despired a pledge by the government to get fifteen
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  Speaker 1: hundred people into work over three years. The Royal Commission
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  Speaker 1: into Antisemitism and Social Cohesion will hear evidence about a
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  Speaker 1: violent protest at the Sydney Opera House on October ninth,
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  Speaker 1: twenty twenty three, in a new block of public hearings
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  Speaker 1: starting today. Israeli flags were burned and anti Semitics lures
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  Speaker 1: were hurled at the demonstration, which came just two days
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  Speaker 1: after Hummas militants slaughtered twelve hundred Jews in southern Israel
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  Speaker 1: and took two hundred and fifty women, children and elderly
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  Speaker 1: people hostage. Ghost stories alive right now at Australian dot
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  Speaker 1: com dot au. The Albanezy government wanted to turn down
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  Speaker 1: the temperature on Australia's housing market and help young people
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  Speaker 1: get a foot onto the property ladder, But just months
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  Speaker 1: after Labour's property tax shakeup. Home values are crashing, investors
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  Speaker 1: are running scared, and taxpayers are underwriting billions of dollars
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  Speaker 1: of debt. So was this all part of the plan.
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  Speaker 1: The Australian's Political editor, Jeff Chambers is here in just
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  Speaker 1: a moment. The property market is recording its worst auction
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  Speaker 1: clearance rates in nearly a decade. We are seeing the
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  Speaker 1: first fallouts of the federal budget, which are driving by
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  Speaker 1: a uncertainty.
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  Speaker 2: Australia has experienced its sharpest monthly fall and house prices
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  Speaker 2: in nearly four years, as interest rates and tax changers
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  Speaker 2: take a combined.
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  Speaker 1: Jeff Chambers is The Australian's Political editor and Jeff, it's
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  Speaker 1: been a couple of months now since the Albanezy government
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  Speaker 1: announced a pretty major shake up to Australia's property tax legislation.
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  Speaker 3: We'll limit negative gearing for residential property to new builds
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  Speaker 3: from July next year, and we're replacing the fifty percent
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  Speaker 3: capital gains tax discount with inflation adjusted indexation to restore
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  Speaker 3: the taxation of real gains.
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  Speaker 1: Do you think it's all working out as intended?
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  Speaker 4: From the Labor government's perspective, this is how they wanted
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  Speaker 4: things to pan out. They want house prices to fall.
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  Speaker 4: They want first home buyers to have a leg up,
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  Speaker 4: and even if that means that auction clearance rates aren't
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  Speaker 4: at the same level as they were, If that means
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  Speaker 4: four months straight of property values going down for the
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  Speaker 4: Albanesi government from Anthony Albernesi and Jim Charmers down, this
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  Speaker 4: was their intention. So they do have some policies in
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  Speaker 4: place to support that, which was around crackdown on negative gearing,
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  Speaker 4: capital gains, discount trusts, but that still got a bit
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  Speaker 4: of a wall to play out. The key driver that
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  Speaker 4: we're seeing is sort of multi folded in terms of
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  Speaker 4: you know, we've got all these A lot of them
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  Speaker 4: are Coalition Morrison government era COVID programs intended to help
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  Speaker 4: first home buyers get into the market. This has generally
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  Speaker 4: been a state and territory based issue that under Scott
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  Speaker 4: Morrison has now become a national issue and it's been
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  Speaker 4: put on steroids. So all the reasonable caps, checks and
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  Speaker 4: balances have been removed by this government. It's cut blanche.
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  Speaker 4: It's a free for all. So you're trying to now
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  Speaker 4: invite these first home buyers in. It doesn't matter how
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  Speaker 4: old they are. It doesn't matter how much money they're earning.
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  Speaker 4: The caps on how much in terms of the value
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  Speaker 4: of the home is enormous. And then you've got interest
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  Speaker 4: rates also higher. So it's that sort of combined feel
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  Speaker 4: for investors who feel like, Okay, this market it's not
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  Speaker 4: looking too good at the moment, and that confidence is out.
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  Speaker 4: So yes, you might get more first home buyers in,
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  Speaker 4: but the overall value of the property market since March quarter,
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  Speaker 4: which was twelve point seven seven trillion, we've now seen
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  Speaker 4: up to one hundred and seventy billion dollars of that
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  Speaker 4: value shaped off.
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  Speaker 1: Yeah, Senior Labor ministers like Tenure Plippisec are saying, as
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  Speaker 1: you said, that this policy is all being executed as planned,
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  Speaker 1: that it's making home ownership more achievable for more people.
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  Speaker 1: There's never been a better time to be a first
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  Speaker 1: home buyer. Not in my lifetime has there been a
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  Speaker 1: better time to be a first home buyer in Australia.
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  Speaker 5: I'm so happy to see.
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  Speaker 1: The Treasurer of Jim Chalmers has said, actually it's the
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  Speaker 1: conflict in the Middle East that's causing the market to
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  Speaker 1: kind of spiral, and that Labour's policies will cause home
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  Speaker 1: values to increase, albeit slower than they were before.
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  Speaker 5: And so all of those things together are playing a
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  Speaker 5: role here, not just one factor or another. And we
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  Speaker 5: continue to expect over the course of the coming years
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  Speaker 5: that prices will continue to rise, but more modestly than before.
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  Speaker 1: But it seems that young people, who ostensibly this policy
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  Speaker 1: was desig to help get into homes aren't coming into
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  Speaker 1: the market at the rate that perhaps the government anticipated,
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  Speaker 1: and equally, investors are hesitating because the value on new
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  Speaker 1: builds just isn't there in the long term. Of course,
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  Speaker 1: new builds are exempted from the changes to negative gearing
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  Speaker 1: that was announced on Federal budget night. So what do
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  Speaker 1: you make of the messaging that's coming out of the
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  Speaker 1: government on this issue.
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  Speaker 4: Yes, so we've got labor politicians out every day since
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  Speaker 4: the budget and they use this line that was in
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  Speaker 4: the budget supplementary papers and they say that the property
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  Speaker 4: market will grow but a bit slower. In fact, since
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  Speaker 4: the budget, the property market hasn't grown. That Treasury wording
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  Speaker 4: it jumped out to me at the time. That is
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  Speaker 4: very optimistic, That is very unlikely to be fact. But
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  Speaker 4: it's a typical case of treasury and bureaucrats trying to
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  Speaker 4: prop up the political outcomes that were wanted by this government,
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  Speaker 4: and what were those outcomes. Well, the equation was made
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  Speaker 4: through count focus groups and polling that labor had to
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  Speaker 4: make a big play for the younger generations. So we
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  Speaker 4: hear a lot about polling. And if any Australian has asked,
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  Speaker 4: and this is the same for a whole range of issues,
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  Speaker 4: do you think it would be a good thing for
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  Speaker 4: these younger guys to crack the market and house prices
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  Speaker 4: might come down a little bit. Well, a grand parent
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  Speaker 4: or a parent might say, well, yeah, look, I think
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  Speaker 4: that is a good thing if that helps, you know,
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  Speaker 4: Jimmy or Johnny or whatever it might be get the market. Well,
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  Speaker 4: I'm happy with that. Now, if you were to say
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  Speaker 4: something a bit more specific to these people, say well,
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  Speaker 4: your house values and to go down from one point
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  Speaker 4: five to one million, are you okay with that? You're
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  Speaker 4: going to get a different result. There's a lot of
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  Speaker 4: debate over why the market is the way it currently is.
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  Speaker 4: Is it because of interest rates? Wasn't just too high
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  Speaker 4: as it was, but this government has certainly distorted the
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  Speaker 4: market to a point where I think we are seeing
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  Speaker 4: a crashing confidence and we are seeing material impacts at
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  Speaker 4: auctions in the major capital cities and further afield. But
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  Speaker 4: I think the issue is we're seeing people, particularly those
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  Speaker 4: under these government schemes last year, who have paid a
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  Speaker 4: lot of money with some government support, and then you
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  Speaker 4: talk about negative equity, and I think there's a fundamental misunderstanding,
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  Speaker 4: probably on purpose, across the government ranks, about negative equity,
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  Speaker 4: and when they're asked about negative equity and the risk
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  Speaker 4: that is carried through negative equity, they often will just say, well,
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  Speaker 4: we're just happy that these younger people or first home
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  Speaker 4: buyers are crack in the market.
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  Speaker 3: Yeah.
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  Speaker 1: Our colleague Noah Yim reported that the government's decision to
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  Speaker 1: remove the cap on the First home Buyers Guarantee scheme,
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  Speaker 1: which allows people to buy a property with as little
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  Speaker 1: as a five percent deposit with the government guaranteeing that loan,
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  Speaker 1: that that means that tax payers are now underwriting couples
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  Speaker 1: making in some instances almost seven hundred thousand dollars a
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  Speaker 1: year combined. They would previously have been ineligible for that
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  Speaker 1: scheme because they're earning too much. Again, labor ministers like
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  Speaker 1: ten ycond Jim Chalmers have been optimistic about that, again,
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  Speaker 1: saying it's making this more achievable for more people. But
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  Speaker 1: is it actually just putting up more roadblocks to people
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  Speaker 1: who genuinely need a scheme like that in order to
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  Speaker 1: get onto the property ladder.
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  Speaker 3: Yeah.
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  Speaker 4: I think this has been a common theme since the
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  Speaker 4: Albanezi government was elected in twenty twenty two, whether it
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  Speaker 4: was EV subsidies or in these housing areas. They don't
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  Speaker 4: love means testing and they don't like capping programs, and
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  Speaker 4: that means it costs a lot of money to underwrite
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  Speaker 4: these things, to fund these types of schemes, and I
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  Speaker 4: think some economists are correct to call a lot of
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  Speaker 4: these programs middle to upper class welfare, middle class welfare.
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  Speaker 4: What is the true intention of this? Is it to
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  Speaker 4: buy boats? Is it to try and support their political
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  Speaker 4: hopes that these younger folks that they help into a
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  Speaker 4: home will always remember we've got to support labor. Or
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  Speaker 4: is it really about getting genuine first home buyers people
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  Speaker 4: in their twenties thirties, not people from overseas, not people
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  Speaker 4: who are older people who are supposed to get into
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  Speaker 4: a home. Does that home have to be in a
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  Speaker 4: nicer suburb? Well, a lot of older folk who did
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  Speaker 4: buy their home will argue that they had to go
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  Speaker 4: out and buy in the verbs. And I think that's
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  Speaker 4: the problem that we see a lot with younger people
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  Speaker 4: is they want to be close to home, They want
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  Speaker 4: to be close to their families. But sometimes, you know,
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  Speaker 4: you got to you got to make the sacrifice and
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  Speaker 4: make those hard decisions. But when these governments are just
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  Speaker 4: doing these open ended schemes, all very generous schemes, why
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  Speaker 4: wouldn't you tap into it? I mean, I wish. I'm
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  Speaker 4: sure if I had an opportunity again and this was available,
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  Speaker 4: I would probably do the same thing. Yeah.
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  Speaker 1: And the other issue that is incredibly hot here that
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  Speaker 1: also weaves into this issue is migration. Tell me a
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  Speaker 1: little bit about how that's factoring into the situation we
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  Speaker 1: now find ourselves in.
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  Speaker 4: Well, I think it's you know, this is a labor
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  Speaker 4: government that back in twenty twenty three pledged that they
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  Speaker 4: would build one point two million new well located homes
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  Speaker 4: by mid twenty twenty nine. We're way off that we're
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  Speaker 4: not going to hit that mark. And that's a real
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  Speaker 4: shame because one point two million on it's sort of
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  Speaker 4: just a pretty moderate year of where we've been traditionally
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  Speaker 4: in recent years that should have been able to be achieved.
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  Speaker 4: So you've got all these issues with the housing market.
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  Speaker 4: Everyone's obsessed with talking about the housing market, so you
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  Speaker 4: look for something to go, well, okay, why are we
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  Speaker 4: in this position? Well, it must be immigration, and immigration
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  Speaker 4: covers so many areas. It covers transport, networks, community infrastructure,
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  Speaker 4: housing supply. And we have had this huge surge in
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  Speaker 4: post pandemic migration, two record levels, and those people have
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  Speaker 4: to live somewhere. So we see one nation and now
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  Speaker 4: the coalition following one nation leaning very heavily into that area,
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  Speaker 4: calling for restrictions in terms of who can purchase property
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  Speaker 4: in this country.
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  Speaker 2: And I don't believe that foreigners should own any house
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  Speaker 2: in Australia or our farming land. My attitude is i'd
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  Speaker 2: actually stop them, and I'd say I'll give you two
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  Speaker 2: years to sell your product. If you don't, it will
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  Speaker 2: be And.
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  Speaker 4: Then you've got labor holding the line around their migration program.
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  Speaker 4: And I think a lot of that again, you know,
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  Speaker 4: being cynical as a political journalist is because of vote getting.
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  Speaker 4: You know, there's a lot of areas where you've got
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  Speaker 4: big multicultural communities. But the fact there is a lot
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  Speaker 4: of those multicultural communities, a lot of them have come
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  Speaker 4: into this country the right way. They themselves are very frustrated.
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  Speaker 4: They look around and think, ah, this is a problem too.
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  Speaker 4: So you get the true issues around supply and demand,
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  Speaker 4: but then you get these tangential issues which are real
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  Speaker 4: issues too, which takes in migration. And I think come
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  Speaker 4: the next election, whether it's later next year or early
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  Speaker 4: twenty twenty eight, migration will absolutely be a hot button
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  Speaker 4: issue for voters.
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  Speaker 1: Just lastly, Jeff, we've been here once before when the
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  Speaker 1: then Treasurer at Paul Keating attempted to quarantine as it
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  Speaker 1: was called at the time, negative gearing that push rents,
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  Speaker 1: particularly in Australia's capital cities as investors attempted to recoup
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  Speaker 1: some of the financial losses that they made as a
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  Speaker 1: result of that decision. That was reversed by the hawk
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  Speaker 1: Keating government just two years later in nineteen eighty seven,
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  Speaker 1: and it's been a pretty hot issue in elections ever
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  Speaker 1: since then, and particularly since Bill Shorten introduced that as
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  Speaker 1: a policy and lost at an election. If I can
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  Speaker 1: ask you to look into your crystal ball for a second,
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  Speaker 1: do you think we'll see a similar reversal from the
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  Speaker 1: Albanese government if this situation gets bad enough, or do
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  Speaker 1: you think that they will stay the course, Noting that
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  Speaker 1: we're still a couple of years out from an election
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  Speaker 1: and there is time for the electorate and for the
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  Speaker 1: market to.
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  Speaker 4: Settle, they're going to stay the course. This is their
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  Speaker 4: big generational reform play. They'll live or die by this.
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  Speaker 4: They've all been wanting to do this for a long time.
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  Speaker 4: The argument is that it's a different time to when
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  Speaker 4: Bill Shorten tried to do this in twenty nineteen. Bill Shorten,
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  Speaker 4: I'm sure we'll disagree with that, but this is their
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  Speaker 4: big generational reform piece. The long term effects it'll come
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  Speaker 4: outside the election cycle. And I spoke about the one
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  Speaker 4: point two million target for new homes that comes in
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  Speaker 4: mid twenty twenty nine, So you realize a lot of
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  Speaker 4: these guys targets will come after the next election, and
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  Speaker 4: whoever's in charge, then good luck. If they win the
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  Speaker 4: next election, there's going to be a lot of things
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  Speaker 4: where the government hasn't met the expectations that they've set
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  Speaker 4: for voters.
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  Speaker 1: Jeff Chambers, thank you very much. Thanks Jeff Chambers, is
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  Speaker 1: The Australian's political editor. You can read the latest in Newssport,
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  Speaker 1: business and politics right now at the Australian dot com
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  Speaker 1: dot au