Property industry groups have welcomed the federal government’s commitment to build one million new homes in Australia over five years from 2024.
The federal government has struck a National Housing Accord to address Australia’s housing shortage by aligning all levels of government, institutional investors and the construction sector.
The federal budget will also deliver $350 million in additional federal funding to deliver 10,000 affordable homes over five years from 2024, on top of their existing election commitments.
The funding will incentivise superannuation funds and other institutional investors to make investments in social and affordable housing by covering the gap between market rents and subsidised rents.
Vicki Doyle, Chief Executive Officer of superannuation fund Rest, welcomed the Housing Accord announcement.
“Rest has been an investor in institutional residential developments overseas since 2014,” Doyle said.
“In our experience, these assets have been valuable in enhancing the financial interests of our members.”
“We are interested in exploring how the development of domestic residential investment opportunities at scale can provide similar value to our 1.9 million members.”
State and territory governments have agreed to build on their additional commitment with up to 10,000 new homes as well, delivering up to 20,000 new affordable dwellings in total.
Property Council of Australia Chief Executive Ken Morrison said the agreement demonstrates bold ambition and a welcome collaborative approach, but will require further action to deliver.
“Australia is facing a housing affordability crisis and as the Productivity Commission found last month, greater housing supply needs to be a key solution,” Morrison said.
“Achieving the Government’s target will require more tangible actions than have been announced tonight, and we look forward to working with the Government on practical steps to boost supply.
“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.
“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.”
Housing Industry Association Managing Director Graham Wolfe said the provided a necessary indicator to governments at all levels that priority action was needed should housing supply fall below 200,000 new homes each year.
HIA’s forecasts show that this situation is playing out right now – with around 196,000 new homes predicted to start in 2022 and 2023, falling to around 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,” Wolfe 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.
“The Budget commitment of $10 billion to create the Housing Australians Future Fund which aims to deliver 30,000 social and affordable rental homes, has the capacity to bridge the housing deficit. The addition of a further 10,000 affordable homes in tonight’s Budget is an important extension of this commitment.”
Master Builders CEO Denita Wawn said struggles around housing affordability had persisted over many decades.
“The RBA has recently identified the capacity constraints limiting the rate of housing growth and the level of dwelling investment with increases in labour and materials costs expected to compress margins and increase the risk of insolvencies, as such, this Accord is timely,” Wawn said.
“Master Builders has long advocated for the obstacles faced by the building and construction industry that prevent many of the homes we need from getting built to be addressed. This includes lengthy delays in approvals for land title, development and building applications, occupation certificates, shortage of land in the right places, high developer charges, and inflexible planning laws.”
The Accord also covers a range of actions, including:
- States and territories to expedite zoning, planning and land release for social and affordable housing
- The Commonwealth to provide financing options through the Housing Australia Future Fund to facilitate institutional investment in social and affordable housing
- Working with local governments to deliver planning reforms and free up landholdings
- Institutional investors to leverage investment that delivers for their members’ interests and for the national interest
- Construction sector peak bodies to support high energy efficiency rating construction, the training of more apprentices under an extended Australian Skills Guarantee and work to make housing more responsive to demand.