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Australia: housing affordability to be a problem for at least 40 years

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Housing affordability is likely to be an issue for at least 40 years in Australia, with the demand for new homes needing bold policy, a major new report says.

The report by the Committee for Economic Development of Australia says policy needs to reflect the great Australian dream of owning a home is over for many people, reports Sydney Morning Herald.

“What the CEDA report highlights is that … the issue is far more complex and without changes now, could have longer-run consequences,” CEDA chairman Rodney Maddock says in the report.

It finds a decline in interest rates and the end of credit rationing has caused housing prices to surge worldwide and the poorest will struggle to find homes.

One of the report’s authors suggests Australia needs 20,000 new dwellings that are affordable to low-income people each year.

The paper also recommends the number of measures. Council planning restrictions need to be relaxed and more consistent, and housing density should be increased. Changes to tenancy laws to provide certainty to long-term renters. A move towards charging an annual land tax instead of transaction taxes such as stamp duty. Also, larger component of capital gains should be taxed, says the report.