The Commonwealth Government has asked the Productivity Commission to inquire into the affordability and availability of housing for families and individuals wishing to purchase their first home.
The Commonwealth Government appreciates that home ownership is highly valued by Australian families and individuals. The ability to achieve home ownership continues to be of vital importance in maintaining family and social stability.
The Government recognises that Australians who are established home owners have invested a very significant proportion of their finances in their home. The family home is the most significant asset that most people ever acquire in their lifetimes and represents around two-thirds of all household wealth in this country. While existing home owners have benefited very significantly from the appreciation of house values, this has made getting into the market more expensive for would-be buyers.
It is with this in mind that the Government has asked the Productivity Commission to evaluate all components of the cost and price of housing, including new and existing housing for those wishing to purchase their first home.
Importantly, the Commission will examine impediments to first home ownership, and provide assessments on the feasibility of reducing or removing impediments.
The State and Territory Governments have a significant responsibility in relation to the costs of purchasing a home, given the impact of their decisions in such areas as the level of stamp duties and the release of land for new housing.
The responsibilities, policies and practices of all levels of government as well as the private sector will be considered by this Productivity Commission inquiry.
The Commonwealth has made a very significant contribution to affordability for first home buyers through the First Home Owners Grant Scheme which has now assisted 482,000 since its inception in July 2000, and we remain committed to continuing to assist families and individuals with this policy.
Under the Coalition policy, since 1996 there has been a period of sustained economic prosperity with rising real incomes, lower unemployment and home loan interest rates at around historical lows. Lower interest rates, as well as greater competition in lending markets, has reduced the cost of borrowing for many Australians and significantly increased the ability of people to buy a home.
In continuing to support the goal of home ownership, we believe it is important to comprehensively evaluate all of the key factors affecting the attainment of first home ownership, in order to help identify ways to ensure that Australians continue to have the best possible opportunity to achieve home ownership into the future.
The Productivity Commission has been asked to report back to the Government by 31 March 2004. The terms of reference are attached.