Study shows how 8 per cent of houses can be made more affordable

Suburbs with shared equity schemes have seen an 8 per cent rise in levels of home ownership compared to similar areas in NSW and Victoria, a new study has found, as debate surrounds the government’s housing affordability package expected in the May budget.

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The University of Adelaide findings have been released ahead of a meeting of federal and state treasurers on Friday, where Victoria’s Tim Pallas will turn the tables on Scott Morrison over land supply and call on the Turnbull government to release unused Defence holdings.

The report analysed 10 years of data, comparing South Australian suburbs that have established shared home ownership schemes and up to 80 suburbs in NSW and Victoria with the same house prices, age profile, proportion of houses to units, unemployment rate, income levels and marriage rates.

Under a shared ownership scheme, the government or a private investor takes on 25 per cent of the mortgage and takes that share of the profits or losses from any future sale of the property.

Shared equity has been described as “very interesting” by the Turnbull government, making it one of the very few approaches to tackling the housing affordability crisis that it was been willing to canvass.

The Turnbull government has so far backed away from other affordability suggestions, including allowing first home buyers to raid their superannuation to fund deposits and replacing stamp duty with a land tax, instead insisting states need to increase supply to solve the country’s housing dilemma.

Mr Pallas, in a letter to Mr Morrison ahead of the treasurers’ meeting, highlighted a series of measures the state had announced to tackle housing affordability and said the federal government should do more.

“We believe the Commonwealth government needs to play a more active role in increasing land supply across the country. We would like to work with the Commonwealth on an audit of federal land to identify opportunities to increase the supply of housing within the urban growth boundary.”

Victoria is eyeing Defence land at Maribyrnong – on which it has already made an offer to the Commonwealth – as well as the Maygar barracks in Broadmeadows, CSIRO land in Highett and land at Williams Air base in Laverton.

The University of Adelaide research, conducted by the International Centre for Financial Services, found for every 1 per cent rise in the penetration rate of the South Australian government’s shared equity loans, home ownership in the sample areas of Salisbury, Playford and Onkaparinga increased by approximately 0.6 per cent.

If shared ownership schemes penetrated just 5 per cent of similar low income areas in NSW and Victoria, such as Tuggerah, Villawood, Clayton and Dandenong, home ownership rates would rise by up to 8 per cent, and thousands of new buyers would enter the market.

Report co-author Ralf-Yves Zurbrugg said the findings showed other states could benefit from having a program similar to South Australia.

Victoria recently announced a number of finance measures including a 400-home shared equity trial and the abolition of stamp duty for homes under $600,000.

Professor Zurbrugg said the suburbs that most benefit from shared equity are those with low income households who might be excluded from the market for not having enough savings to put down a deposit, despite being credible borrowers in every other way.

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