Money Young Australians better off renting than buying a home, says economist Chris Richardson

22:22  12 april  2017
22:22  12 april  2017 Source:   ABC News

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With capital city house prices soaring, Deloitte economist Chris Richardson reveals the one bit of advice for those hoping to get a foot on the property ladder.

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Deloitte Access Economics' Chris Richardson speaks at the National Press Club. © AAP Deloitte Access Economics' Chris Richardson speaks at the National Press Club. Young Australians would be better off renting than trying to purchase a property given record prices in capital cities, according to one of Australia's most respected economists.

Deloitte Access Economics' Chris Richardson used his speech at the National Press Club today to offer some advice to those seemingly locked-out of the property market.

"The one bit of advice I give to young Australians amid our housing market right now is: don't buy," he said. "Although there are elements of rental stress — and governments can be involved in helping to do things around that ... let's not forget that rents today make a lot more sense than housing prices."

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His comments come as a proposal to allow young people to access their superannuation to purchase a home causes growing division in the Coalition, with some praising the idea and others describing it as "madness".

Property prices in Sydney and Melbourne have increased by around 10 per cent in 12 months, according to the Australian Bureau of Statistics, and the Coalition has promised solutions in the May budget.

PM Malcolm Turnbull has reiterated his opposition to letting young people access their super to purchase a home, but stopped short of explicitly ruling it out.

Mr Richardson said the property market was rightly "front and centre" for the Federal Government and the Opposition, which are both proposing policies to improve access to the market.

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"There are smarter and less smart things that can and should be done around housing policy," he said.

"We should push our politicians to have the courage and listen to the professional advice that I'm pretty sure they would be getting. But don't assume this solves the problem."

Mr Richardson said capital gains tax discounts were "too big", and tinkering with negative gearing was "not good policy".

"Negative gearing is a symptom not a cause of the problems — the reason why it has taken off is because our capital gains tax discount is absolutely too big," he said.

There is no national housing crisis: Joyce

Meanwhile, Deputy Prime Minister Barnaby Joyce said there was "not a housing affordability crisis in Australia" and people unable to buy in capital cities should consider moving to regional areas.

Barnaby Joyce denied there was a © AAP/Dean Lewins Barnaby Joyce denied there was a "national housing crisis" at a press conference in Sydney today.

"There is a housing affordability crisis in Sydney and Melbourne — that is where there is a housing affordability crisis," Mr Joyce said. "If you go to Tamworth you can buy a house for about $300,000 — you get a job and pay it off."

Mr Joyce and his Nationals colleagues have repeatedly called on Australians to consider relocating from the major cities.

"There are great opportunities in regional areas and you will be able to buy a house that you can pay off," Mr Joyce said.

"With the spare money, because you are not actually mortgage-strapped every week because you just don't have a spare dime, because every cent you have got is going to a mortgage."

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