Government rolls out new housing affordability package

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The federal government is busy laying the groundwork for its housing affordability package in the May budget.

Among other highlights, Treasurer Scott Morrison said a tax on empty housing stock and plans to encourage elderly Australians to downsize their homes could be in the works.

Speaking prior to an agenda-setting address on housing affordability on Monday, Morrison ruled out changes to negative gearing and called Labor’s plans to trim negative gearing “cruel”.

“Negative gearing has been around for a century. It's an established structural component of Australia's housing market. If they are going to pull the rug out, who is going to put a roof over people's head?" he told ABC Radio.

Morrison condemned the “chainsaw approach” of hacking into negative gearing, referring to it as “reckless”.

“But frankly I think it is cruel because it is saying to people in Sydney and Melbourne who are losing hope, ‘you can change a tax and you can buy a house.’” he said. “This is a comprehensive problem, you can't expect results overnight.”

Shadow Treasurer Chris Bowen has accused Morrison and Prime Minister Turnbull of being negligent, saying negative gearing was “an essential part of the [housing affordability] mix”.

“Any housing affordability plan which doesn't involve reform to negative gearing is a sham,” Bowen said.

As for the issue of downsizing, Morrison commended the work of former NSW Planning Minister Rob Stokes, who recently quantified the number of empty bedrooms spread throughout Sydney’s suburbs. According to Stokes, the number of empty bedrooms was equivalent to an astonishing 20 years of housing supply.

Morrison said these were “reasonable issues to address, because downsizing frees up housing supply.”

The treasurer also spoke of imposing tighter controls on foreign investors after figures from the Office of State Revenue revealed that more overseas investors than first-home buyers had entered the property market last September.

“We have tightened up the rules and increased the fees; it's a big part of the issue, it is an area that has my very close attention,” Morrison said.

The treasurer said he was also open to first-home buyers being allowed to access their superannuation to contribute to a deposit.

“The issue is that [there are] more and more people … going into retirement who have larger mortgages [and] who don't own their own homes,” he said. “One of the reasons why home ownership is such a positive is that people who go into retirement when they own their own home are in a much stronger position. People owning their own home is a good thing for the economy, and we need to do as much as we can to achieve this.”

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