I'm putting this forward as a suggestion for Chris Minns, Kellie Sloane, Daniel Mookhey and all other members of the NSW Parliament

NSW is the engine room of the country and we should lead from the front, by setting the standard for all others states to follow, we should lead by example.

In order to really solve the housing issue, we need to have an honest discussion about what the problem actually is.

And unfortunately when you look into the housing problem, you quickly discover it is a wicked problem. A problem with no easy solution, and where commonly proposed solutions and their 2nd & 3rd order effects, often create further issues and complications instead of resolutions. This is because you have 2 groups of people pulling in entirely opposite directions based on what benefits them most.

Group 1 = People who are renting and don't own any real estate

  • They want real estate to be as cheap as possible to make it easy as possible for them to buy
  • Often affectionately called YIMBY’s (Yes In My Back Yard) they want ever increasing levels of development & housing density such that the surge in new supply of housing can create a decreasing cost to buy

Group 2 = People who already own their own home or investment properties

  • They want higher real estate values, because higher real estate values mean they get richer
  • Pejoratively referred to as NIMBYs (Not In My Back Yard) because they actively oppose all types of property development in their area. Preventing the creation of new property areas (new subdivisions), the creation of new property, through higher density in existing property areas, and other changes that would increase the supply of housing

In addition there are a few more pieces to the puzzle that add to the above and exacerbates this.

  • Around 55-65% of total Australian household wealth is in residential real estate
  • And the poorer a household is, the more likely it is their only asset (outside their superannuation)
  • We are a global outlier, very heavily reliant on real estate, with the USA by comparison only having 25-30% of their household wealth in property, and their households being far more invested in shares (be they listed businesses on the NYSE or NASDAQ or unlisted private businesses)
  • Every time a first home buyer purchases a house they move from Group 1 to Group 2 and they shift the balance in what is politically popular and what is not.

Once you see the housing problem through this lens you can now start to understand why it has become such a contentious issue.

  • The poorest cohort of Australians have no property and are firmly in group 1
  • Middle class Australians are firmly in group 2, besides superannuation, their home is their only asset, and the only thing building wealth for them
  • The richest cohort in Australia have a much smaller amount of their net worth in real estate such that they might not really care too much about the real estate market, their assets mostly outside the property market, in listed or private businesses means they sometimes act as swing voters, but usually end up leaning toward group 2 due to them having at least some exposure to real estate

What do we know happens when we implement certain policies?

Big Stick approach

Victoria has shown how a stick only approach designed to crush demand for property can work. Since it started its anti-property agenda in 2020 Melbourne has gone from being the 2nd most expensive property market in the country, behind only Sydney. To now ranking 6th, lagging in order behind Sydney, Brisbane, Perth, Adelaide & Canberra. With only 2 other capital cities underperforming it, being Hobart & Darwin

  • A win for first home buyers
  • A loss for everybody else

Carrot approach

It’s not too long ago that the Gold Coast experienced a massive property price slump from the opposite approach, an explosion in supply. Caused by a low regulation local government enabled property construction boom just prior to the GFC, culminating in a property market that fell from 2008 - 2014. At the time it was deemed a laughing stock by property investors, as it was completely out of step with the rest of the Australian property market. But if you want cheap property they nailed this, and all without harsh regulations, quite the opposite, they were, according to some, too permissive.

Each of these examples shows us that governments are able to manipulate the property market to move the needle in whatever direction they want, it is merely a matter of by what means they do so, and the will they have to do it.

  • A win for first home buyers
  • A win for developers
  • A loss for property owners

So how do you solve this problem?

  • It needs to be multi phase, intentional and it needs to consider everyone, you shouldn't just throw those who fall outside your political affiliation under the bus

  • STEP 1 = Signal intent, let property investors know, we are changing our tune, we believe property is for living in, not for building wealth. Historically you could, but we are changing the rules, and are going to pull every lever we can to make sure you can't going forward. We want to be a nation of owners, not a nation of surfs
  • STEP 2 = Give all property investors a golden bridge, give them time to sell down their real estate portfolios, and make absolute certain you don't tank the market whilst they do, so they feel like you have not broken the implied social contract that all governments of the past 100 years have made with them and never broken before. Set a time limit, and if they don't get out before, then it's their fault, but give them plenty of notice, and ample opportunity to correct course to our new north star
  • STEP 3 = Give them an alternate destination for their capital. It's all well and good to tell them they need to sell all their assets, but where should they put their capital to build wealth? You need to provide clear signals, through incentives for where you want them to move their capital to. Should they instead provide commercial property for businesses? should they provide base load capital for strong stable Australian businesses like BHP & Woolworths? should they provide risk capital for start up businesses that could go bust but could also 1000x like the team behind build australia feel we should? should they put it into cryptocurrency? should they invest it overseas in other countries like the USA, Dubai, Singapore or Hong Kong? or should they take it down to their local sports bet and throw it all on their local football team?
  • Dont leave this to chance, if you do not stake your flag in the ground, and send a clear signal, they will more than likely move their capital to places you don't want them to (offshore or gambling)
  • STEP 4 = Set the new north star, chart the new course, and implement the new policies. You will need both a carrot & stick approach

SO WHAT POLICIES SHOULD WE IMPLEMENT?

  1. A full refund of GST for all new residential property in NSW where settlement occurs within 12 months of a certificate of occupancy being issued

  1. A full refund of all land tax paid by a property developer where:
  • 100% of the all constructed property as been sold and settlement has occurred within 12 months of a certificate of occupancy being issued

AND

  • For single home developments <18 months between purchase settlement and sale settlement
  • For duplex developments <24 months between purchase settlement and the last sale settlement
  • For townhouse developments <36 months between purchase settlement and  the last sale settlement
  • For apartment tower developments <48 months between purchase settlement and  the last sale settlement

These 2 measures incentivise property developers to build property and sell all constructed property as quickly as possible at the prevailing market rate, and disincentivises them from holding onto any of the constructed properties, speculating on further growth.

  1. Create 2 special economic zones
  • Coffs Harbour (Post codes 2450 & 2452)
  • Port Macquarie (Post codes 2444, 2445, 2446, 2441, 2439)

Within these 2 special economic zones have special regulations to massively boost property construction and incentivise people to move there, away from overpopulated areas experiencing acute housing stress

  • Increase the price cap to $1.5M for $0.00 stamp duty for first home buyers
  • No payroll tax for employees located within the above post codes, to incentivise employers to move operations to these cities
  • In the city centres, remove the height limit for new property, such that super tall residential & commercial towers can be built, significantly increasing housing stock
  • Pursue an aggressive deregulation agenda for these areas to make construction of new property as streamlined as possible

Choosing these 2 centres as the focal point will decentralise the NSW population away from Sydney in a way that when the high speed rail from Sydney to Brisbane does get built it will be profitable, due to there being sufficient demand from the sufficiently large population centres along its route

The aim should be to grow these centres to eventually have populations of 1M people, and be comparable to Newcastle & Wollongong, but denser. With more highrise offices in the city centre, more highrise apartments in the city centre, so the surrounding areas can remain low rise single family homes.

  1. Equalising land tax for individuals, Companies & Trusts

The Land tax brackets should be revised to equally apply to all owners regardless of structure, and should be amended as such

  • $0.00 - 5,999,999.99 = 1%
  • >$6,000,000.00 = 2%

The reason to do this is to equally incentivise or disincentivise investment property owners based on the total value of property they own, not the structure they choose to own them through

Noting that the Main Residence Exemption should remain, so the above is only impacting property investors