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Putting affordability Front and Centre

NEWLY ELECTED REIA boss Neville Sanders discusses the goals for the national body in 2015.

FIRSTLY, I AM VERY humbled to be in this role at what is a very important time for the sector. In 2014, REIA advocated strongly on critical issues nationwide, including housing affordability, the loss of first- home buyers from the market and foreign investment in Australian residential real estate.

Housing affordability will continue to be front and centre of our work in 2015 as we work with the Government to ensure that Australians have the ability to purchase their own homes and establish some long-term security. A lack of affordable housing impacts on the economy as well as the wellbeing of individuals and the cohesiveness of communities and society.

With this in mind, REIA has been very concerned by what is emerging as a long-term trend with the decline in first-home buyers. The latest Housing Affordability Report, published by REIA and Adelaide Bank, recorded an all-time low for first- home buyers for the September 2014 quarter – just 12 per cent of the owner-occupied market.

With first-home buyers increasingly feeling shut out of the market (or worse, giving up on ever owning their own homes) it is very disappointing to see the removal of first-home buyer grants in many states and territories. Western Australia is now the only jurisdiction to offer first-home owner grants for established homes. While all other states and territories offer grants ranging between $10,000 and $26,000, first-home buyers must purchase or build a new home to be eligible. However, agents around Australia know that first-home buyers prefer established homes in established suburbs, where they are closer to public transport and entertainment choices.

In 2015, along with the senior management of REIA, I will be directly advocating for all states and territories to recommit to first-home grants for established homes. We will also be strongly advocating for an improved supply of housing for social housing tenants transitioning to private rental. This could be achieved by utilising individual private investors. In addition, we will be calling for conveyancing stamp duties to be abolished and replaced by an efficient source of revenue for states and territories.

We believe that lessons can be learnt from experiences overseas, and we have repeatedly advocated to the Government that first-home buyers should have the option of unlocking their superannuation, as is the case in Canada, New Zealand and Singapore. Survey after survey of first-home buyers has found that an adequate deposit was the biggest barrier to purchasing a property, and allowing access to superannuation with the amount withdrawn repaid over a set period provides a very workable solution.

It is very disappointing to see the removal of first-home buyer grants for established dwellings in many states and territories, especially when new research suggests that first-home buyers are becoming more burdened with debt and increasingly using personal loans and credit cards to finance their deposit.

The year ahead will also be an important one for tax reform, with terms of reference for the long-awaited Government review of Australia’s taxation system expected to be released early in the New Year.

As an organisation, we have been following this issue very closely and we have already commenced conversations with key Government figures regarding the retention of negative gearing and changes to stamp duty levels. We have also been conducting our own research to paint a picture of who are Australia’s property investors accessing negative gearing.

Our research to date shows overwhelmingly that it is ‘mum and dad investors’ who purchase a single rental property as a means to help secure their retirement, which in turn helps ensure their self-sufficiency as they age and leave the workforce.

It would also be absurd to treat property differently to any other investment option, such as shares, which can also be negatively geared. Expect to hear much from REIA on this matter as the year progresses!

We will also be working closely with the Commonwealth Government to implement the recommendations from the House of Representatives’ Inquiry into foreign investment in Australian residential real estate. We welcomed the inquiry’s report, which was released in November and proposed a series of very workable solutions, including the establishment of a national database for property purchases, an alert system with the Department of Immigration and capital gains benefits forfeited to Government for breaches. We were also very pleased to see a recommendation for the Foreign Investment Review Board to focus more stringently on audit and compliance.

In 2015, we will be working with the Government to implement the report‘s recommendations as a matter of priority – an issue for which REIA will be advocating on behalf of our members.

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Neville Sanders

Neville Sanders was the President of the REIA.he President of the REIA. Neville is currently the National Manager of Strata Services at Whittles Body Corporate Management.