Experts lukewarm on strategy to provide affordable housing Recession, stamp duty key to prices

Experts in economics and politics are lukewarm on a strategy for affordable housing in Geelong’s Armstrong Creek growth area.
They said a looming recession or stamp duty cuts would have a bigger impact on land prices at Armstrong Creek, earmarked to supply homes for around 55,000 residents over the next 15 years.
Simultaneous release of housing estates to boost supply and faster planning processes to reduce developers’ holding costs emerged as key planks for the strategy during an affordable housing forum in Geelong last week. Representatives of developers and the three levels of government, including Federal Housing Minister Tanya Plibersek, attended the forum.
Monash University politics academic and leading media commentator Professor Nick Economou said the strategy would “not make much difference” to land prices compared to the impact of an imminent recession.
“The economy will resolve the question of affordable housing but not in a way people will like,” Prof Economou said.
“What the governments are hoping is that if they release land and start building houses then eventually supply will meet demand and bring prices down. What’s more likely is a recession is on the way.”
Prof Economou said governments were trying to pass the buck for affordable housing onto developers.
“In the ’60s and ’70s the governments would solve this problem by building houses themselves. The problem of leaving it up to developers is that they’re not into supplying social goods – they’re into making money, he said.
“I’m not convinced (the Geelong strategy) is the way to solve housing problems. In an era when governments won’t build and operate infrastructure themselves, this is all they can come up with.”
Prof Economou said the Geelong strategy was a consequence of the last federal election, when the Labor party campaigned on affordable housing.
But the “cyclical dynamics” of the economy was overtaking the Federal Government’s campaign promises, he said.
“This is the end result of policy debate lagging far behind the economy. These (housing) estates will come on line during a downturn in the economy or a recession.”
Deakin University economics Professor Pasquale Sgro called the Geelong strategy a “good proposal” but said it was just “tinkering around the edges”.
Prof Sgro favoured cuts to land taxes such as stamp duty to improve housing affordability.
“If State Government reduced the percentage (of stamp duty) it would have a bigger effect and for a longer term,” he said.
“The effect would also be across the state, not just in Geelong.
“However, (State Government’s) argument might be that these houses will sell for less and therefore our stamp duty will be less.”