To fix the housing crisis, further reform is needed that shifts taxation away from earnings onto passive assets.

Rates of homeownership have fallen against a backdrop of rising prices. Meanwhile, affordability concerns in private rental housing have grown. Australia’s housing system is in crisis.

Over many years, the calls for more new housing supply to address this problem have grown louder. Despite repeated efforts, supply has lagged behind demand, hence the upward pressure on housing costs in all sectors.

There are numerous factors responsible for this impasse. Supply-side impediments deserve attention. But it is easy to overlook the way developments on the demand side of our housing system equally frustrate repeated efforts to improve supply and lower costs.

One important shift is in the direction of rentier capitalism as the ever-growing quest for investment opportunities through secondary residential ownership is overlaid by incentives to extract and maximise rental income. Secondary dwellings belong to owners whose primary residence is elsewhere. They may be holiday homes but are more typically held to capture financial returns via capital gain and rental income.

The appetite for such investment is sharpened by tax concessions that the Commonwealth Government has finally moved to reform in the recent budget. Other drivers of this investment demand include the growth of........

© Pearls and Irritations