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Tony MacRae, chief commercial officer at Bluestone Home Loans, sat down with Broker Daily and detailed why the current housing policy focus is dangerously one-sided.
From first home buyer grants to schemes that allow purchases with a 5 per cent deposit, governments are overwhelmingly focused on making it easier to borrow money.
While it will undoubtedly help thousands shave years off their savings time and avoid lenders mortgage insurance (LMI), it does nothing to add a single new house to the market.
MacRae said these well-intentioned demand-side measures simply pour fuel on an already raging fire. As more buyers are empowered to enter the market, they compete for a severely limited number of properties.
This competition drives prices up even further, creating a vicious cycle where government assistance is quickly eroded by inflated property prices.
In Sydney, where the median house price has hit a record high of $1.7 million, a scheme with a $1.5 million cap may soon be ineffective for typical homes.
MacRae noted that the core of the crisis isn’t that people can’t get finance – it’s that there’s nothing to buy.
Governments have consistently failed to meet their own housing supply targets. The reasons include excessive red tape, resource shortages in the construction industry, and a critical lack of supporting infrastructure.
The downsizing dilemma perfectly illustrates the supply shortfall. Australia has an ageing population living in large family homes they no longer need, while young families struggle to find suitable housing. Yet, we punish those who want to downsize with transaction costs like stamp duty.
MacRae believes the solution isn’t to tax them for staying put, but to incentivise them to move through measures like stamp duty concessions, making it financially sensible to free up larger homes for the families who need them.
Our current supply conversation is also often missing an opportunity. The default solution often seems to be building more high-density, high-rise apartments in already saturated urban areas.
While this suits some, it doesn’t cater to retirees seeking community-oriented living or families needing space to grow.
MacRae called for a broader, more thoughtful approach that includes:
- Diverse housing types: Developing a wider range of medium-density options like town houses that appeal to downsizers without forcing them into high-rises.
- Unlocking regional potential: The COVID-19-driven exodus to regions like the Sunshine Coast, Townsville, and Newcastle proved there is immense appetite for life outside the capital cities. However, this shift has stalled due to a lack of housing and, crucially, a lack of infrastructure. People need more than a house – they need GP clinics, mental health services, reliable transport, and schools. Building houses without these essentials simply creates new problems.
- Strategic infrastructure-led development: Projects like the Sydney Metro and the Western Sydney Airport are blueprints for success. They don’t just build houses – they build new communities by creating employment hubs and transport links that make outlying areas genuinely liveable and connected.
The housing crisis cannot be solved by simply giving people more money to compete with each other. This only leads to higher prices and greater debt, said MacRae.
The solution requires a courageous shift in policy focus from short-term demand boosts to long-term supply solutions.
“We need a broader brush approach that not just thinks about how we’re going to make it easier for people to borrow money, but we’re addressing the number of places that we’ve got,” said MacRae.
“We’re addressing people’s ability to maintain a standard of living through services across the board, and not looking at all of these things in isolation, which actually is more of a sugar hit than real solutions.”
[Related: Network calls for tax incentives to help empty-nesters downsize]
