PM says high house prices here to stay

The Prime Minister said on August 4 that he can't promise that house prices will fall as a result of the federal inquiry into housing affordability. Mr Howard said high prices are good for people who already own their homes and he can't see them coming down. The inquiry could only make “valuable changes at the margin that will help, and that's the purpose of this inquiry”, he said. The inquiry is due to report by March 2004 and will examine barriers to first-home buying, the availability of land, the impact of taxes on house prices, and ways to help low-income earners buy their own homes.

Mr Howard rejected the notion that the GST has contributed to rising property prices. He said although the GST does not apply to existing houses, the first home buyers' grant was introduced to help offset the GST's impact on house prices. Mr Howard also ruled out introducing a capital gains tax on the family home or making interest payments on housing tax deductible.