Housing affordability is a problem, but potential solutions put forward by policy-makers do little to address the real issues, says the Property Council of Australia.


While much of the affordability debate has centred on taxation issues such as negative gearing and capital gains tax discounts, PCA chief executive Ken Morrison says this is a “false debate.”


“Australia is having a false housing affordability debate,” he says. “While the problem is very real, the solutions being bandied have nothing to do with the problems that have left us with entry-level housing that is far more expensive than it needs to be.


“There’s no running away from the laws of supply and demand – and it’s what all the experts, including the Reserve Bank and the Henry Tax Review, have identified as the real cause of our affordability woes.”


Morrison says fiddling with negative gearing could actually make the situation go from bad to worse.


“You can’t put $32 billion in new taxes on the property industry and not expect it to harm housing supply and make a bad situation worse,” he says. “Some have argued that investors are driving up house prices. The evidence does not support this. The fact is that owner-occupiers account for two in every three purchases.”