In Part 1 of 2, Oscar discussed the effect of the tax concession on the supply of housing. In Part 2, he examines its effects on house prices and income inequality.
In Part 1 of 2, Oscar examines the effect of the tax concession on the housing supply.
Housing affordability in Australia
Home ownership is a cornerstone of personal wellbeing. In fact, general and mental health is positively related to both home ownership and housing tenure. Moreover, article 11 of the ICESCR, to which Australia is a signatory, recognises a right to adequate housing. Discouragingly, however, the rate of home ownership in Australia has not increased since 1961 and, in 2013, Australia’s median-house-price-to-income ratio for metropolitan housing was among the world’s highest at 5.8.
In my previous article I wrote about housing affordability and the first homebuyer’s scheme as an example of unsound public policy that exacerbates the housing affordability problem. In this article, I shall turn my attention towards tax concessions and consider their impact on housing affordability.