OK, fair enough, more homes Grattan Institute; but it’s a bit of a pity to use the weasel words “housing affordability” when what we really need are lower land prices. The cost of construction of homes has barely matched inflation, whereas Table 61 to ABS Catalogue 5204 shows us that, on average, land prices have increased by more than 10% per annum since 1996.
It’s not good, either, that there’s absolutely no recognition amongst the cognoscenti that the primary determinant of land prices is the extent to which we permit land rents to be privately capitalised: we ‘forget’ that the phenomenon of land price is simply the private capitalisation of land rent. Notionally, if land rent were fully publicly captured, instead of taxing wages and profits, there’d be no land price. Perhaps that’s too hard to get their heads around?
So, whilst zoning and supply are both important factors, they are very much secondary to doing something like The Henry Tax Review recommended: instituting an all-in land tax which would be able to tax land prices away to the extent required.
Banking excesses seem to be the reason we weasel out of the fundamental issue.