Ross Stevenson and Mark Allen interviewed the Commonwealth Bank of Australia’s Chief Economist, Stephen Halmarick, about housing unaffordability on Radio 3AW this morning.

I suppose it’s the immutable law of supply and demand?” queried Stevenson.

Of course!” (or words to that effect), replied Halmarick.

And Victoria’s land tax makes housing more unaffordable and deters builders?”, volunteered Stevenson, (Mark Allen agreeing).

Yes” fulsomely replies the CBA economist.

Now right there’s the big furphy, guys: You got that completely arse-backwards! To the extent that land tax captures part of a site’s rent, so must its capitalised land price diminish; not increase. Cheaper access to land aids developers, and the average land component of residential sales is currently 87% according to ABS data! So we need higher land taxes, not lower. Maybe an all-in land tax, as suggested by the ‘Henry Tax Review’? (“Australia’s Future Tax System“)

I agree with your conclusion, however, boyos: The “bank of mum and dad and grandma and grandpa” is most certainly being called in to help our children to buy a home! 

….. And that’s going to be more than problematical, come the 2027 property crash!