With good reasons, last week’s column on Labor vs urbanity was relentlessly negative, which I still stand by. But one request was reasonable: is there not something positive in the budget, particularly for housing? This column remedies that lacuna.

A shining possibility in the budget suggests the government has realised that supply is not the answer to the housing crisis. No matter how many words or how much money is thrown at it, housing supply is not increasing. It was never the solution.

Far better, now glimpsed in the budget, is to emphasise ownership. The changes to negative gearing and capital gains tax discounts are touted, at least in part, as helping millennials own more homes. A very positive development.

Readers of my recent Wednesday columns on Housing Australia will recall that I believe ownership is 100% the answer. To recap.

Why ownership is good

Owning a home provides security three ways: social strength and inclusion, environmental improvement and financial security. This is often referred to as the triple bottom line of sustainability.

Home ownership amplifies a household’s health; security and stability follow, fostering identity and belonging, a sense of agency and civic pride. It gives dignity and a base from which people can participate in a community and society generally. It creates communal social security.

Secondly, an owned home is environmentally better than an equivalent rental, as owners have an incentive for better maintenance and to invest in improvements (and upgrades to reduce energy demand and improve climate resilience could attract tax breaks).

Home ownership provides financial stability for a household and society generally, building modest wealth over time without speculative risk. It enables households to borrow against it for health, education, and lifestyle and is a buttress against unforeseen changes in life.

Can we encourage more ownership?

It would have bipartisan support. PM Robert Menzies wanted Australia to be a “property-owning democracy”. Labor talks housing affordability (whilst largely ignoring affordable rental housing). And One Nation, without policies, could start with housing.

What if we had a policy to increase home ownership to say 90%? Along the lines of “every household owns one home before anyone owns more than two”. Transforming renters into owners by promoting ownership, at the same time decreasing the attractiveness of property investment. A policy of homes over housing.

It works financially. Almost all households pay a mortgage, but one third pay someone else’s. Why not their own? The budget tax changes are a start. What's needed now is to introduce further legislation that will emphasise ownership above all else, with tax discounts and lending rates favouring first home owners over property investors.

Supply is still a roadblock

However, there’s still one issue with supply: we don’t have enough housing types to suit millennials and their wallets. For too long we’ve had a two-speed housing industry: large family homes and high-rise apartments. Neither suit millennials.

Suburbia was all the rage post WW2. We grew 80% of our housing stock to be the world’s biggest freestanding homes, predominantly for families, but they’re less than 50% of households now. Now valued way beyond the savings of first home buyers.

To address the increasing number of singles and couples and to improve density, we’ve had twenty years of building apartments, medium to high-rise. More complex and expensive to build than houses, apartments are mostly at the luxury end of the market, again priced out of millennials' reach.

We have a mismatch between younger households, mostly singles and couples, wanting a home, and the housing we have. We need smaller, entry-level apartments, competitively priced and suitable as the first leg on the property ladder. A contemporary version of the 1960s and 70s three-storey walk-up flat. But they’ve been banned from our cities for thirty years.

That’s why I’ve been banging on about the 3SWUF for ages. Encourage cheaper and smaller two and three-storey apartments in the ‘missing middle’ suburbs, using existing infrastructure. A few simple changes could radically alter the outcome for housing supply and, consequently, ownership.

Add to that a tax regime that positively discriminates towards ownership and makes property investment less attractive. We would divert monies into more productive activities like manufacturing, services and IT if only the budget hadn’t crippled the CGT discount in those areas.

We could be a happier and more secure population, with an election winner for whichever party championed it. That optimistic enough?

Cross-Sections are Friday musings from Tone Wheeler, formerly of Tone on Tuesday. Amateurs draw plans, professionals draw sections – never at cross purposes

Tone Wheeler

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