Property supply magic

The Henry Tax Review pointed out that in an internet savvy world, capital flight is only a click away. The one thing that cannot be hidden is nature's bounty; land, the minerals under it and the electromagnetic spectrum above it.

State and Federal governments must reform the tax incentives layered around housing investment. That vile impost - Stamp Duty - should be abolished for a higher and flatter Land Tax with a zero threshold. Negative gearing should be abolished. Capital gains tax on housing investments should also be reduced in favour of a better Land Tax, improving the velocity of the land market. The FHOG should be banished, never to return.

Land Value Tax is impossible to evade, minimise or avoid. Secret bank accounts in Bermuda are of no help.

Land Value Tax on a quarter acre block in the inner west of Melbourne costs barely $300 each year. When capital gains are in the tens of thousands of dollars a year, the motivation to put land to its highest and best use pales against a little lazy land hoarding. A land banker can afford to simply go to sleep and wait until buyers come knocking.

Take 25A Edwin St, Croydon, Sydney. The property has been on the market for over 1000 days. In that time the demand for housing in Sydney continues to go up and the vendor has increased his price from the original $898,000 to $1,120,000. In any other market, sellers would have to reduce the price to sell it. In land and property, the seller can with-hold it for as long as they wish at little cost.

The land of plenty for some; 2 minute noodles for the rest.

This is not the free market we were brought up to believe in. Don't Buy Now. Join the Buyers Strike.