Joe Hockey has sought to mollify aspiring homebuyers offended by his comments about entering the market, saying he “totally understands” that housing is very expensive for a lot of people.
The treasurer faced criticism for his remarks on Tuesday that “if housing were unaffordable in Sydney, no one would be buying it” and “the starting point for a first home buyer is to get a good job that pays good money”.
Hockey attempted to move on from the controversy on Wednesday, saying he understood the depth of feeling in the community about his comments. He said the government had “more work to do” to create more, better-paying jobs, and was working with the states to increase supply of housing to improve affordability.
“It is difficult for first home buyers to get into the market; there’s no doubt about that, particularly in Sydney,” Hockey told ABC radio.
“We are doing everything we possibly can, not only to ease the cost of living burden on families but, importantly, we’re doing everything we can to help to make housing more affordable for new entrants.”
In a separate interview with ABC News Radio, Hockey declined the opportunity to apologise for his remarks and accused the interviewer of “playing the man”.
“From my perspective, I’ve seen over the years how challenging it can be for people to get into housing,” he said. “Interest rates were much higher when I bought my first home, which was a unit, and at that time prices seemed extraordinarily high but what we’ve got to do is help people to get into better-paying jobs no matter what they’re doing.”
Hockey said he had raised the issue of housing affordability with his state and territory counterparts earlier this year and this led to the establishment of a taskforce chaired by the Victorian Labor treasurer, Tim Pallas.
Source: ABC
“For a lot of people, a lot of Australians in Sydney and Melbourne, some other parts of Australia, housing is very expensive and I understand that. Look, I totally understand that,” Hockey said.
“When you’re committing so much of your wage to your mortgage it’s a big ask, with all the other pressures in life, but what we’ve got to do is increase the stock, increase the supply of housing which is going to respond to the demand side of the equation.”
He said the Australian Prudential Regulation Authority was also working with banks to ensure loans going out to people that can afford to repay the debt.
“This is the fundamental point – you’ve got to be careful that people don’t borrow so much money that they’re unable to repay the money if and when interest rates start to increase, so what you’ve got to do is make sure that as a government you work towards creating more jobs with greater income,” he said.
Asked about the plight of nurses and police officers who were struggling to buy houses in Sydney and Melbourne, Hockey said “they are good jobs and we want those jobs to be even better”.
“That’s the point. You can’t be in a position where you’re not given the opportunity to get ahead. You’ve got to actually have a government that helps facilitate aspiration and what we’re doing is endeavouring to give everyone in Australia the opportunity to get ahead, to own their first home, and the best way to do that is increase supply. The best way to do that is help people get a job and a well-paid job and that’s exactly what we’re doing.”
The Westpac/Melbourne Institute index of consumer confidence fell this month amid increased concerns about house prices, jobs and the stock market. The index showed consumer sentiment fell by 6.9% in June to 95.3 points. It had risen 6.4% in May after the federal budget and interest rate cuts.
“It now appears that last month’s surge of optimism was a brief relief rally,” said Matthew Hassan, Westpac’s senior economist.
Hockey’s original comments about housing affordability and getting good-paying jobs sparked strong criticism from Labor and the Greens, who accused the treasurer of being out of touch. The observation was likened to Hockey’s remarks after the 2014 budget that Australia’s “poorest people either don’t have cars or actually don’t drive very far in many cases”.
But the western Sydney-based Liberal MP Craig Laundy came to Hockey’s defence.
“He was saying that if you have a job and that job is secure and that job is well paid, a bank will lend you money and interest rates are as low historically as they have been,” Laundy told the ABC.
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Hockey again rejected calls for the government to pare back negative gearing, which allows investors to claim a tax deduction for the expenses associated with their rental property.
“If you change negative gearing in a market like Sydney, which has very a low vacancy rate, you are going to push up rents which will have a horrendous impact on some of the lowest income families and the Greens’ policy of abolishing negative gearing will push up rents,” he said on Wednesday, reprising an argument he had previously made.
“It doesn’t [make housing more affordable] because if it pushes up rents it will make life incredibly difficult for families.”
Under the Greens’ policy, released on Sunday, negative gearing would be removed for all assets purchased after 1 July 2015.
The Grattan Institute chief executive and economist, John Daley, disputed suggestions rental prices could increase.
“As a matter of economic theory, given that the housing market is close enough to a fixed stock of housing you would expect a change to after-tax returns … will show up in house prices but it will not show up in rent. This is another reason why you might want to phase this in,” Daley said.
Australia’s main political parties reacted cautiously to the Greens’ negative gearing proposal on Sunday. The Coalition, which has previously ruled out changes to negative gearing, warned of potential flow-on effects on rental prices, while Labor, which has previously been open to partial changes, said it was still developing its housing policy.
