With the $10 billion affordable housing investment vehicle, the Housing Australia Future Fund (HAFF) having finally passed through the Senate earlier this week, Australia now has a better chance of getting closer to the ambitious national target of 1.2 million homes by 2029.

Under the deal that was announced on Monday, Labor’s flagship HAFF fund will spend a minimum $500 million annually to deliver at least 20,000 new social homes and 10,000 new affordable homes over five years.

By Prime Minister Anthony Albanese’s reckoning, this represents the single biggest investment in social and affordable housing in over a decade.

While affordable housing typically offers rents to key essential workers at (circa) 25% below market rates, social housing is the modern moniker for public housing, which state governments have progressively backed out of.

In return for the Greens’ support in getting HAFF through the senate the federal government has also agreed – following the $2 billion committed in June – to chip in an additional $1 billion for public and community housing.

However, the Greens failed to include within its deal with the Albanese government on HAAF, support for a rent freeze and caps on future increases. This may be a blessing given that outgoing Reserve Bank governor Philip Lowe believes rent controls would inflame the rental crisis by spooking investors onto the sidelines.

One of the key challenges to providing new housing for up to 500,000 new Australians annually is the undersupply of adequately zoned land and inefficient planning regimes

Bring in the instos

Housing Minister Julie Collins expects HAFF to be life-changing for many Australians, is confident of meeting the 30,000 commitment within the first five years of the HAFF, and notes that ‘the money needs to be out the door within two years’.

After consulting with the construction sector, she’s confident [housing] targets can be reached. But the only way to build 1.2 million homes by 2028/29 notes Debby Blakey CEO of pension fund HESTA is to fix ‘investment settings’ to attract institutional assets managers into residential property.

Equally critical to achieving this outcome, adds Blakey is the ongoing development of the build-to-rent sector into a highly regarded institutional asset class.

Population surge

While the housing sector at large is encouraged by the Albanese’s government’s additional ‘helicopter money’ for a new national housing target of 1.2 million homes by 2029, population surge, and poor planning are expected to exacerbate the current housing crisis.

Adding to what is already an acute housing shortage is the return of migration to post-covid levels. Recently released Australian Bureau of Statistics (ASB) figures show net migration running close to 320,000 since January this year, up 25% on Treasury forecasts.

Meanwhile, Westpac data suggests permanent and long-term monthly net arrivals are 70% up on the long-term average. Based on these numbers, Sydney and Melbourne alone – where 90% of migrants head – can expect another 2 million people over the next five years.

According to AMP Capital’s numbers, an additional 30,000 will do little to address Australia’s mounting housing shortage. While Australia requires an additional 230,000 new dwellings to meet demand in 2023, AMP Capital is forecasting a shortfall of around 50,000.

Over the next five years, the industry has factored in a shortfall of 160,000 homes on the 1.2 million target. While Master Builders Australia expects the apartment development boom to lift total dwelling starts to 1.04 million by 2028, that’s still 200,000 shy of the national cabinet’s recently revised figure.

Fix broken systems

Given the challenges created by the surge in net migration, Property Council of Australia CEO Mike Zorbas urges all states and territories to fix broken state planning systems.

One of the key challenges to providing new housing for up to 500,000 new Australians annually, notes Zorbas is the undersupply of adequately zoned land and inefficient planning regimes.

“Now we must turn our attention to the unfinished business of improving our state planning systems so they can deal with the welcome influx of skilled migrants and students over the decade ahead,” he said.

Echoing similar sentiment, CEO of Brickworks Lindsay Partridge recently noted that while house approval in NZ takes around 21 days, here in Australia it can take six to nine months, with approval on land often taking up to a decade.