What are the implications of Victoria’s new housing statement? RMIT expert

An economics expert says Victoria’s new housing statement is a good start. 

Dr Peyman Khezr, Senior Lecturer, Economics, Finance and Marketing 

Topics: housing demand, development, housing regulations 

“The new housing reform announced for Victoria is primarily focused on increasing the supply of housing by expanding development and facilitating planning permits and construction. 

“The emphasis on supply is a crucial step to address the current housing crisis. 

“Instead of pumping cash into the housing market, such as through the HomeBuilder scheme, the government should identify sources of market inefficiencies and regulate the market to address these issues – which is what they are doing with these new reforms.     

“Adequate regulation could reduce or eliminate speculative demand for homes, allowing first-time home buyers to compete more fairly in the market.   

“Other sources of market inefficiencies relate to the market mechanism itself.   

“Regulations promoting consumer protection would improve fairness in the housing market and benefit home buyers in the long term. 

“The statement also introduces some excellent initiatives to regulate the rental market and protect renters.  

“For instance, it places restrictions on rent increases, bans rental bidding, and extends the notice period for rent increases. 

“This plan will boost the housing supply in Victoria over the next 10 years and has potential to alleviate the current housing crisis and improve the homeownership rate within the state.  

“Some benefits such as planning permits and rental regulations will be felt immediately while others such as land release and development may take a few years to kick in.  

“However, significant impact at the national level will only be realized if similar measures are adopted by other states and territories. 

“More reforms and regulations are needed to address other market inefficiencies, such as underquoting, which has significant financial and psychological costs for homebuyers.” 

Dr Peyman Khezr is a Senior Lecturer in the School of Economics, Finance and Marketing at RMIT and a member of RMIT’s Behvaioural Business Lab. He is an applied market designer with an interest in the housing market.