The property and housing industries have largely welcomed Tuesday’s Federal Budget as a good start to solving Australia’s housing supply crisis, but many said more could be done to address affordability.
Treasurer Jim Chalmers handed down the mini budget Tuesday night, labelling it “a responsible budget that is right for the times and readies us for the future”.
In a Budget that walked a fine line between providing cost of living relief without adding to inflation, the housing sector has mostly been classed as a ‘winner’, with the creation of a new national Housing Accord.
An agreement between all levels of government, institutional investors and the construction sector, the Accord aims to build one million new, well-located homes over five years from mid-2024.
The Federal Government will provide $350 million over five years to deliver 10,000 affordable dwellings.
This is in addition to the 30,000 new social and affordable housing dwellings delivered through the Housing Australia Future Fund.
Real Estate Institute of Australia President Hayden Groves welcomed the creation of the Accord and its ambitious building target.
“REIA has long called for a plan to increase housing supply in a real way with proper targets that holds State and Territories accountable and deals with the key barriers in land release, planning and that is pro-investment for the private property markets,” he said.
“Done right, this can give Australia’s housing stock the generational injection it so badly needs in the same way policy programs in the 1970s did.
“Of course, the devil will be in the detail, and much more detail will be needed especially in relation to the intent to provide opportunities to superannuation funds and build-to-rent developers ahead of Australia’s ‘mum and dad’ investors.
“The REIA will be looking out for any attempted inequities in this space.
“The Australian real estate industry manages a combined property management portfolio worth $3 trillion and manages $78 billion in rents each year on behalf of family investors.”
Mr Groves said while the National Accord was a step in the right direction, especially in relation to housing supply, far more could be done to address affordability.
“It is an opportunity lost once and for all to deal with the wicked problem of stamp duty by State and Federal Governments which has been entirely and disappointingly omitted within the National Accord,” he said.
“However, one million new affordable homes are a supply ambition to be applauded. The challenge has now been thrown down to get these homes built and Australians housed in a very short period.”
Mr Groves said the Budget 22-23 would have no immediate impact on housing or the rental affordability crisis.
“Since May, repayments on a $500,000 mortgage have increased by almost $700 each month and household saving is forecast to slump below pre-pandemic levels,” he said.
“Inflation is forecast to peak at 7.75 per cent in the December quarter of 2022, ease to 3.5 per cent by June quarter 2024 and moderate to 2.5 per cent by 2024–25.
“Higher mortgage payments are expected through higher interest rates because of this persistent inflation will impact on both housing and rental affordability.
“Constraints on housing supply, including a backlog of new builds from supply chain pressures, all mean affordability pressures for home buyers and renters are unfortunately likely to continue.
“Affordable housing measures, whilst both necessary and welcome, will have no immediate impact on housing and rental affordability and availability woes for many Australians.”
Renters and Housing Union
The Renters and Housing Union welcomed the increase in funding for housing development but expressed concern that Dr Chalmers stressed most of the supply would have to come from the market and not from government.
The union affirmed the need to increase housing stock to redress the thousands of Australians being pushed into homelessness by the private market but said selling public land and funds to private developers would only add fuel to the fire of the rental unaffordability crisis.
RAHU Media and Communications Officer Ellise Bourne said the important responsibility of safe and equitable housing should not be in the hands of landlords and developers.
“Houses should be homes, not investments,” she said.
“This current system deprives people of their basic human right to have a home and it needs to stop.”
Ms Bourne said the RAHU was also worried that without Labor legislating a national policy to regulate the rental market, Australians would continue to be priced out of their homes.
“Without meaningful policy to regulate rents, stock shortage will only continue and the waiting list for public housing will continue to grow if renting remains unaffordable for the majority of the population,” she said.
RAHU Secretary Eirene Tsolidis Noyce said the Albanese Government had provided little detail on who the Budget housing measures were for and had not revealed what their public housing builds would be.
“The Federal Government has the power to prioritise our fund for public housing and we know this is the most stable model to meet the essential need of a home,” she said.
“The thousands of Australian low income renters waiting for a stable home need a clear commitment from their government to fund the public housing they’ve been waiting decades for, and it’s time for this new government to take responsibility and provide it.”
LJ Hooker Head of Research and Head of Business Intelligence Mathew Tiller said no single measure in the Budget was expected to have a direct or substantial impact on the property market over the remainder of the 2023 financial year.
“That said, the announcement of a new national Housing Accord between federal, state and local governments, as well as institutional investors and the construction industry will help boost housing supply and will have a positive impact in delivering additional social and affordable housing over the medium to long term,” he said.
Mr Tiller said other Budget initiatives to help homeowners downsize, first home buyers in regional areas, and funding for a shared equity scheme were all positive measures.
“Indirectly, the combination of infrastructure commitments, policies to address cost of living pressures and improve wage growth are expected to boost spending, confidence, and investment, which should feed through to local economies and suburban property markets,” he said.
The Property Council of Australia
The Property Council of Australia Chief Executive Ken Morrison welcomed the Budget’s commitment to create one million new homes under the new national Housing Accord but said further action was needed to deliver on the promise.
“We commend the government for making housing supply and affordability a centrepiece of this budget and for striking an agreement with the states and territories,” Mr Morrison said.
“Australia is facing a housing affordability crisis and as the Productivity Commission found last month, greater housing supply needs to be a key solution.
“The national Housing Accord is a very welcome commitment and we thank the government for engaging with the Property Council on this initiative.
“Achieving the government’s target will require more tangible actions than have been announced, and we look forward to working with the government on practical steps to boost supply.”
Mr Morrison also commended the government for its commitment to review the barriers to institutional investment in housing, including build-to-rent housing, to be conducted by the soon-to-be-established Housing Supply and Affordability Council.
“If we are serious about providing greater housing choice and affordable options, it is important we have fair tax settings that encourage investment in all types of housing,” Mr Morrison said.
“Right now, current tax settings around build-to-rent housing are a barrier to investment, and a levelling of the playing field will bring more rental stock online, as noted by the Productivity Commission last month.
“Build-to-rent housing offers renters greater security in their tenancy, superior facilities and services, and an additional form of housing which Australia sorely needs,” he said.
The Property Council also welcomed the government’s commitment to build 10,000 affordable homes and 20,000 social homes through the establishment of the Housing Australia Future Fund, as well as the additional 10,000 new affordable dwellings at the energy efficiency rating of 7 stars or greater (or a state’s minimum standard).
Property Investment Professionals of Australia
Property Investment Professionals of Australia Chair Nicola McDougall said the new Housing Accord was a “sound strategy” that started to address the undersupply of rental properties across the nation.
But she said the proportion the government itself would commit was not enough.
“While the aspirational target of one million new affordable dwellings in the five years from 2024 is to be applauded, it must be noted that the Federal Government’s plan only includes its own commitment to actually construct 40,000 social and affordable houses across the nation – a drop in the ocean compared to what is needed,” she said.
“According to the Australian Bureau of Statistics, nearly one million dwellings were reportedly constructed in the five years to March this year.
“It is vital that all stakeholders – including private ‘mum and dad’ investors who provide the vast majority of rental accommodation in this country – are considered in any plan to improve the supply of rental housing in this country.
“That’s because 16.7 per cent have sold at least one dwelling in the past two years, which potentially depleted the supply of rental stock nationally by nearly 270,000 or 10 per cent.”
Ms McDougall said more rental stress could be on the cards for tenants with the 2022 PIPA Annual Investor Sentiment Survey finding that if the 19 per cent of investors who were considering selling in the next 12 months did so, a further 200,000 rental properties could disappear from the rental market.
“Tellingly, three of the top four reasons why investors may sell their property over the year ahead is because they felt they had lost control of their assets,” she said.
Housing Industry Association
The Housing Industry Association (HIA) praised the Labor Government for tackling Australia’s housing supply and affordability challenges in its first Budget in more than 10 years.
HIA Managing Director Graham Wolfe said the target of one million new homes over five years was the first step in setting a housing benchmark that can be measured, monitored and delivered.
“Importantly, this target provides a necessary indicator to governments at all levels, that priority action is needed should housing supply fall below 200,000 new homes each year,” he said.
Mr Wolfe said HIA forecasts showed that this very situation was playing out now, with about 196,000 new homes predicted to start building this year and in 2023, and drop to about 185,000 in 2024 and 2025.
“Year-on-year, housing supply shortfalls, as we’ve seen for most of the last two decades, inevitably add pressure to Australia’s housing challenges,” he said.
“For every year that Australia doesn’t deliver enough new homes to meet demand across the housing continuum, we will see a negative impact on both housing affordability and rental affordability.
“HIA has consistently advocated for the Federal Government to play a leadership role in achieving stable housing supply, year-on-year, in all forms and for all tenures.
“HIA welcomes the opportunity to be part of the Housing Accord and identify ways to maintain a stable level of housing supply across the housing continuum, putting housing supply front and centre.
“A structural improvement in housing affordability can only be achieved for all Australians if the supply of housing is sufficient to meet the needs of the whole community.”
Mr Wolfe also welcomed the Federal Government’s $10 billion commitment to create the Housing Australian’s Future Fund, which seeks to build 30,000 social and affordable rental homes.
“HIA also welcomes the Budget commitment to progress the government’s other key housing initiatives,” he said.
“Housing Australia must be a central agency responsible for delivering integration of the Commonwealth’s housing policies to improve the supply of social housing, affordable rental housing and private market housing.
“HIA looks forward to the formation of the National Housing Supply and Affordability Council. The Council must steer Housing Australia in the collection and reporting of housing data that shines a light on our progress towards the target of one million new homes.
“The government’s housing commitments in the Budget clearly recognise HIA’s call during the Federal Election to make housing a national priority.”
Home loan marketplace Joust said the Budget contained cost-of-living relief but still urged homeowners to investigate whether they could get a better deal on their home loan.
“Cost-of-living and housing affordability were predominant in the budget last night, but with inflation continuing to peak over the next couple of months, rising electricity bills and groceries will still have a huge impact on everyday household expenses,” Joust Chief Executive Officer Carl Hammerschmidt said.
“That’s why it’s imperative for consumers to double down on their budget and check if they can get a better home loan rate.
“Our data shows that first-home buyers have significantly been impacted, and have had their borrowing power decrease over recent months as a result of rising interest rates.
“Meanwhile, the number of refinancers have increased as Aussies look to ease their expenses.
“With the support for Australians that are looking to downsize combined with the Help to Buy Scheme and First Home Buyer Guarantee, more first home buyers will have a chance to enter the property market next year.”
Shore Financial Chief Executive Officer Theo Chambers said the announcement of one million new homes was a great initiative that would assist with housing supply and create jobs.
However, he said spending restraint was a concern.
“While I understand the focus of saving the budget deficit, taking away from previously committed projects from the previous coalition government is something I’d like to see more details on,” he said.
“The Treasurer stated that $22 billion would be saved or redirected from former government projects, which is a significant amount of spending that has stopped.
“This could be linked to future job losses and potential write-offs on work already done for certain projects.”