‘A quarter of a trillion dollar mistake’: New report highlights massive cost of private housing handouts

Housing has moved beyond many Australians’ reach because the government is subsidising the private market instead of building social housing, a new report has found.

Everybody’s Homes “Written Off” report shows the federal budget is expected to lose almost a quarter of a trillion dollars to negative gearing and capital gains tax concessions between 2010-33. It argues investor tax breaks over the next decade could build more than half a million social homes, and have outstripped spending on social housing by at least five times.

Further highlighting the disparity, the report says the government spent about $164 per person on public and community housing in 1982. By 2022, the number had shrunk to $61.

In response, the national campaign to fix Australia’s housing crisis has urged the federal government to scrap tax concessions for property investors and build more dwellings for lower-income Australians.

“In the midst of a major cost-of-living crisis, the federal government is spending record amounts on housing to line the pockets of investors,” campaign spokeswoman Maiy Azize said.

“That has made renting and buying homes more expensive than ever. Tax handouts for investors will be a quarter of a trillion dollar mistake if the government doesn’t change tack.”

Research by property data group CoreLogic reveals rents increased 8.3% in 2023, outstripping an 8.1% rise in house prices and eclipsing a 4% rise in wages.

Meanwhile, analysis by Ray White Group’s chief economist Nerida Conisbee revealed the cost of median-priced houses has increased by 78% over the past decade, while houses priced in the top 5% have doubled in cost.

Part of this is driven by a greater concentration of wealth which is often invested in luxury homes, Conisbee said.

The federal government has promised to reinvigorate the sluggish home-building sector, pledging to deliver 1.2 million new dwellings over five years.

A major piece in the housing puzzle was set in place last week, with applications opening for the government’s Housing Australia Future Fund.

Housing Minister Julie Collins said the fund, along with the National Housing Accord, would deliver 40,000 social and affordable rentals in its first five years.

Over the longer term, Written Off argues Australia should aim for a target of at least 10% of all housing stock to be social housing.