Unreasonable taxes, housing affordability issues reinforced to government

“Removing the countercyclical measures introduced at the peak of the housing cycle would be a good place to start,” Mr Murray said.

“This includes reviewing the appropriateness of assessing loan serviceability against an interest rate of 7 per cent, almost double the current market rate. Reversal of the punitive rates of stamp duty on foreign investors is also overdue.

“These measures would assist in restoring the confidence in the housing market that was lost in 2018.”

According to Mr Murray, the conditions over the last six months have happened faster and on a larger scale than the softening seen after the GFC.

“This decline in industry activity has occurred in an environment when lending rates have remained relatively stable,” he said.

Had the RBA lowered rates [on Tuesday], it may have eased some of the pressures in the housing market, but the acceleration in the downturn in building activity during 2018 was largely due to regulatory imposts from state and federal governments.

If measures are introduced to see the taxes increases for households, like an increase in capital gains tax, Mr Murray said the property market could contract further.

The senior economist added that there are less new starts occurring, with approvals for new homes for the first quarter of 2019 extrapolated to the rest of the year equating to approximately 180,000 new starts, as opposed to 2018’s 220,000 new starts.