High-density development and better rent assistance key to addressing housing crisis, economist says

Brendan Coates, the economic policy program director at the Grattan Institute, said in order to address the housing crisis, high-density housing should be encouraged in cities, negative gearing should be abolished and the capital gains tax discount reduced.

In a wide-ranging speech on Wednesday night, Coates also called for renting to be made more attractive, including by increasing commonwealth rent assistance by 40%, and he demanded greater investment in social housing.

The economist said there had been accelerated declines in home ownership rates in the past two decades.

While home ownership rates peaked at more than 71% in 1966, between 1981 and 2021, home ownership rates among 25-34 year-olds fell from more than 60% to 40%.

He said that among the poorest 40% of that age group it has more than halved, from 57% to 28%.

Home prices are falling at their sharpest rate since the 1980s, CoreLogic data shows, after an enormous leap of 24% last year.

But when considering incomes after accounting for housing costs, inequality was growing, and the poor were being hurt the most, he said.

Wealth inequality in Australia, while still below the OECD average, has been growing over the past two decades and inheritances were only widening the gap.

Coates said his suggestions for addressing the problem should be considered by the federal government which has promised a national housing and homelessness plan.

He wants the commonwealth to provide incentives for states and territories to increase housing supply. He called for the building code to be strengthened and for developers to return a greater proportion of the windfalls gained by land rezoning to the community.