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Legislative Assembly for the ACT: 2004 Week 10 Hansard (Wednesday, 25 August 2004) . . Page.. 4107 ..

Wednesday, 25 August 2004

MR SPEAKER (Mr Berry) took the chair at 10.30 am and asked members to stand in silence and pray or reflect on their responsibilities to the people of the Australian Capital Territory.

First home buyers

MR HARGREAVES (10.31): I move:

That this Assembly welcomes recent measures to assist first home buyers to enter the Canberra housing market.

Mr Speaker, ACT house prices have exploded since 1997. The allhomes property report for residential property in the ACT over the past 13 years shows that the median house price hovered around the $130,000 to $150,000 range through the mid-1990s, before starting an amazing climb to $360,000 in 2004. In the same period, the median unit price has gone from $135,000 in 1997 to $291,000 in 2004. Prior to this price explosion, the ACT had benefited from very high levels of housing affordability due to relatively high incomes, higher workforce participation rates and lower unemployment rates.

For those of us who own property or are in the process of paying a mortgage, the increase in house values is no bad thing. It means our wealth has increased, and there is plenty of evidence that the economy as a whole benefits from this increase in household wealth. However—and there are always qualifiers in matters economic—this price explosion has resulted in a generation of would-be home owners being locked out of the housing market. This is the issue that I would like to bring before the Assembly today: how we are going to avoid locking a generation out of the housing market.

As a general rule, governments should not tinker in the housing market because it involves significant costs and has the potential to impact badly on the economy. That said, we must face up to the reality that a generation of potential home buyers face significant barriers to home ownership. This group of first home buyers represented around 12 per cent of the residential housing market in the ACT in 2003-2004.

Another fact often overlooked in this debate is that the same people who are hit by the higher house prices are also hit by the rise in rents that flow from rising house prices. The challenge for a modern, responsible and progressive Labor government is to address this issue of housing stress through a variety of policy measures. This is exactly what the government’s package of housing affordability measures has been designed to do. The package includes tax relief on land tax and stamp duty and establishes a program of affordable greenfield land releases each year for the next five years.

A major element of the package is the tax relief for home buyers, which includes substantial cuts in stamp duty and land tax. This tax relief is specifically designed to ease the burden for lower to middle-income earners wanting to enter the housing market. Stamp duty concessions are also available to those people who may have lost their home because of financial hardship or the break-up of a relationship or who are re-entering the housing market. It is a progressive and socially responsible tax package that Labor can be proud of.

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