Housing Affordability, Migration Key to Economic Recovery: PCA

The Property Council has released a seven-point plan pushing for the property industry to lead a post-pandemic economic recovery.

The plan includes recommendations on market incentives to boost new housing construction, broad-based tax reform, improved housing affordability and support for a renewed migration program, among others.

Property Council of Australia chief executive Ken Morrison said some "big and bold thinking" was required to get the Australian economy going again after the impact of the Covid-19 pandemic.

“As Australia’s biggest employer which contributes over 13 per cent of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments,” Morrison said.

The property industry lobby group and peak body's seven-point plan aims to stimulate construction, grow skills, attract investment and boost confidence across the industry.

It includes a $50,000 scheme to kickstart construction for new housing, generate jobs and boost consumer confidence, with the potential to stimulate construction of 50,000 new dwellings, supporting more than 200,000 jobs, by bringing forward market demand for new housing.

The PCA believes state and territory governments could initiate additional demand stimulus through first home buyer grants, stamp duty and foreign investor surcharge relief.

Also on the table are broad-based tax reforms to enhance productivity and increase living standards, including the abolition of stamp duty and replacing this revenue by broadening the GST base in the medium term.

Existing negative gearing and capital gains tax settings would be retained, along with targeted tax relief and no increases to existing taxes and charges for 12 months and the removal of "counter-productive" foreign tax surcharges for commercial property and the creation of new developments.

The PCA plan also proposes improved housing affordability through permanent improvements to planning systems by efficiently and strategically rezoning and servicing land, accelerating non-government projects currently in the planning system.

Build-to-rent initiatives would also be supported, incentivising the private sector to produce more affordable housing for key workers, older Australians and those at risk of homelessness.

A new pipeline of retirement living housing would also be developed, with a focus on removing disincentives for older Australians to downsize.

Migration also plays a key role in the PCA's post-coronavirus recovery plan, with a "Welcome to Australia" initiative to provide the skills, people and population required for economic growth.

Secure testing, isolation and tracing arrangements for international arrivals aimed at both protecting public health and facilitating economically-important travel would be backed by a major international marketing campaign promoting Australia as a safe and healthy destination to visit, study, work and start a new life.

Temporary visa classes that have the potential to make an immediate and positive impact on economic growth would be targeted, and incentives offered for permanent skilled migration.

The plan includes recommendations to attract international investment through accelerated FIRB approvals, and the removal of foreign tax surcharges for commercial property and new developments.

With moves already afoot by various state governments to green-light approvals of “shovel-ready” projects and kick-start construction pipelines to boost the nation's pandemic-hit economy, the PCA also calls on federal, state and territory governments to do their bit in fast-tracking property and infrastructure projects.

This would include prioritisation of government property projects as well as fast-tracking surplus government land disposal to help accelerate further activity, urban renewal and investment.

The Property Council's recommendations to government comes in the wake of the Reserve Bank's second warning about the risk of deteriorating commercial conditions on financial stability, noting that rising vacancies and rapidly reducing rent income will pose challenges for leveraged property investors and developers.

In its May minutes, the board noted that "lower incomes and confidence, as well as lower expected population growth, were expected to affect demand for new housing for an extended period."