Neither major party’s policies will be enough to shift the dial on housing affordability in the NSW election, experts warn.
The cost of living, including housing, which forms the largest proportion of many households’ expenses, is the leading concern for NSW voters at the state election this Saturday.
Despite the property downturn, the fastest rise in interest rates in a generation has hit households hard. Home owners face steep increases to mortgage repayments, while tenants endure whopping rent increases and the prospect of a still-expensive housing market.
Some policies do not go as far as they could, such as the Liberals’ watered-down stamp duty reform. Some stimulate demand, such as the Liberals’ Kids Future Fund or Labor’s promise to increase the thresholds for stamp duty exemptions to $800,000, by adding more money into voters’ pockets, which pushes up prices.
The Greens’ commitment to build 100,000 homes over the next decade was seen as the most ambitious, but there are questions over its feasibility as a minor party.
However, all three parties have promised renters better protections as no-grounds evictions are set to be reformed, no matter who wins.
Dr Peter Tulip, chief economist at centre-right think tank the Centre for Independent Studies, said building more homes was key to improve affordability – something neither major party has made a substantial commitment to, except the Greens.
“Instead we’re getting gimmicks and policies designed to give an appearance of empathy that politicians understand and care, and they’re doing something about it,” Tulip said.
“In fact nothing they’re proposing will make a significant dint in the problem.”
Tulip said the Liberals’ Kids Future Fund exacerbates the problem as it stimulates demand among the wealthy in Sydney who are more likely to be able to contribute the maximum amount.
Brendan Coates, economic policy program director at independent think tank the Grattan Institute, said the NSW Greens’ promise of 100,000 homes over 10 years would make the most difference for middle-to low-income earners.
“Among the major parties neither offer much that helps the underlying problem, which is that we haven’t built enough and that has led to rising rents and prices,” Coates said.
“But neither the government’s shared equity scheme, the option to switch to land tax or any of the other announcements are going to shift the dial on housing affordability in NSW. It’s because the solutions that make the most difference are politically difficult,” he said.
“Neither parties are willing to acknowledge, in the lead up to the election, to make housing more affordable is to build more in the areas where the politics of NIMBYs is so explosive.”
For the first time, all the major parties have committed to improving protections for renters. Photo: Flavio Brancaleone
The pledge by Labor to look at the Greater Cities Commission’s housing target was positive, Coates said, but it is unclear where those targets will land.
“The most ambitious policy is that of the Greens – that would shift the dial for low-income earners. It’s no coincidence that it’s put forward by a party that doesn’t have to make the budget balance,” Coates said.
Independent economist Saul Eslake said both major parties were committing to housing policies with questionable capacity to address affordability.
Eslake was “sceptical” of the Liberals’ Kids Future Fund, as it would likely result in the average price of housing rising, not increasing home ownership.
He said Labor’s commitment to abolish the stamp duty reform was a “step backwards” as economists and experts unanimously agree its replacement of land tax is a progressive policy.
Professor of urban and regional planning Nicole Gurran, director of the Henry Halloran Research Trust at the University of Sydney, said the major parties’ 30 per cent target for social and affordable housing on government-owned land was “unambitious” and out of step with the level of demand.
“It is striking that neither side have committed to increasing the supply or addressing the backlog of supply required in social and affordable housing,” Gurran said.
“In NSW, despite the phenomenal amount of stamp duty from the building boom we’ve reaped over the past five years, we’re not seeing that ploughed back in.”
Home owners and renters are facing higher housing costs in an already inflationary environment. Photo: Rhett Wyman
She said while the Liberals have relaunched a “rezoning” program that will push 70,000 new homes, mostly in the western Sydney area where most new homes have already been built, there is no guarantee the land will be used, or that the homes will be diverse or affordable.
Gurran welcomed the teal independents’ commitment to introducing sustainability to new and existing housing.
UNSW senior research fellow in the City Futures Research Centre Dr Chris Martin said no previous election has had all the larger parties make deliberate pitches to renters in a bid to improve their situation.
“That’s significant and good and also well overdue, so good on all of the parties for seeing this as an issue,” Martin said, noting there were many details that would determine the level of protections.
That includes the list of grounds for evictions for fixed and rolling leases, the tribunal’s discretionary powers, and whether pets are allowed in rentals as a default.
A spokesperson for the NSW Liberal and Nationals government said they announced a $2.8 billion housing package as part of the 2022-2023 budget and the Rezoning Pathways program would allow proponents to nominate proposals for new housing supply.
Member for Newtown and Greens spokesperson for housing and homelessness Jenny Leong said a drastic shift was needed to deal with the state housing crisis.
“This is all about priorities and choice,” she said in a statement. “The harm being done to people because of the housing crisis is real, and that means we need a massive shakeup of business as usual.”