CPI FURTHER EVIDENCE FOR ACTION ON HOUSING SUPPLY AND STAMP DUTY

April 27th,2022

ABS figures released today show that the All Groups CPI, increased by 2.1 per cent in the March quarter of 2022 and by 5.1 per cent for the year – the highest quarterly increase since December 1990 and the highest annual increase since June 2001.

 

According to ABS, the annual changes for the analytical series of trimmed mean and for the weighted median, which exclude large one-off price impacts, were 3.7 per cent and 3.2 per cent for the year. The annual changes are the highest since March 2009 for the trimmed mean and the highest since March 2010 for the weighted mean.

 

According to the Real Estate Institute of Australia (REIA) this foreshadows a major decline in housing affordability.

REIA President, Mr Hayden Groves said the concerning CPI figures further emphasises the need for action on improving housing supply and replacing stamp duties.

 

“With all measures of inflation, the highest for over a decade and outside the Reserve Bank of Australia’s target zone increases in the cash rate are imminent which will add to mortgage payments and decrease affordability for first home buyers.

 

“With the prospect of first home buyers finding it increasingly difficult to enter the housing market, home ownership in Australia will continue declining. This is already being evidenced across all states and territories and is most pronounced in the 35 to 44 age group.

 

“Availability of affordable housing is a goal that is shared by both the Coalition and the Opposition. It impacts on the functioning of the economy as well as the wellbeing of individuals and the cohesiveness of communities and society.

 

“Addressing home ownership now by both major parties will reverse the trend of falling home ownership and avoid the looming significant policy problem of large numbers of long-term renters aged 45 years and over remaining in the rental sector and possibly requiring rental support in later years.

“Failure to address this issue will have long term budget implications.”

 

Mr Groves said that historically low interest rates over the last two years have made mortgage payments achievable for many first home buyers but the transaction cost of stamp duties on top of the deposit gap have remained a major hurdle.

 

“With an increase in interest rates imminent that hurdle becomes more difficult. It is time for the Federal Government to take a leadership role in having state-based stamp duties removed,” he said.

Mr Groves said that the Housing Group increased by 2.7 per cent for the March quarter and 6.7 per cent for the year.

 

“This is the highest annual increase since June 2001 and is attributable largely to rising construction costs for new dwellings.

 

“Despite various reports of rent increases the capital city weighted average increase for the March quarter was 0.6 per cent and 1.0 per cent for the year – the lowest annual increase since December 2015. There was however a large variation between capital cities with Sydney and Melbourne having decreases of 1.2 per cent and 0.9 per cent respectively and Darwin and Perth having increases of 11.3 per cent and 9.7 per cent respectively.

 

“In short, the CPI figures demonstrate the need for urgent action on housing affordability and leadership from the top,” concluded Mr Groves.