Kelly O’Dwyer’s committee looking into foreign property investment in Australia has genuflected to all the property urgers and touts and ignored one critical fact: we have years and years of supply of suitably-zoned land in Australia. There is absolutely no shortage of supply. There are hold-outs and drip-feeders pushing up prices, however.
Why not let both foreigners and all locals pay a holding charge, a land tax, as recommended by The Henry Tax Review and watch the supposed “shortage” of supply disappear instantly?
The other aspect of public capture of the rent of land, of course, is that the more is taken publicly, there’s less to be privately capitalised into higher prices. Yes, that’s correct, Kelly, a land tax keeps a lid on escalating property values because it’s the land that increases in price, not the improvements – foreign investors or otherwise.
Your committee missed the need for greater capture of publicly-generated land values, Kelly?
That amounts to a whitewash. Shame!
Yes, I can’t disagree, Michael.
The return of property prices from nosebleed levels as they are now to the long term average based on rent return and income levels will never occur due to policy changes. Such changes will be forced upon Australians by fundamentals such as collapsing iron ore prices (happening), slow down in China (happening), rising unemployment (happening), and an end to irrational exuberance (not happening-yet).
All these combined will force policy change such as an end to NG and the taxing of non resident property investors as GST and income tax revenues will hit a wall.