What does the ‘Housing Accord’ in the 2022 Federal Budget mean?
In last night’s Federal Budget, Jim Chalmers, the Federal Treasurer, announced a new national partnership called ‘Housing Accord’ – a commitment to build one million new ‘well located’ homes over five years, from 2024.
The announcement took the collaborative approach, where Dr Chalmers said it would bring governments, investors and industry together to build more affordable homes to combat the housing crisis.
Australia is in a unique position where our population is growing at a rate that our housing supply is not keeping up with the growth. With more competition for housing, the more property prices will go up, so any amount of interest rate rises or inflation will not reduce the impact on the fact that we need more homes to home new immigrants and changing family situations, now and into the future.
The fundamental reason why the Federal Government announced that the project would not start until mid-2024, is that we are still going through a period of labour shortages and supply shortages that cannot keep up with the demand to build new.
The key to the collaboration, Dr Chalmers said, is that the supply will need to come from the market, not the government, however “the role of the government is a leading role – to kick-start the investment we know needs to happen.” Housing Minister, Julie Collins, said that she will be working with superannuation funds and institutional capital to help accelerate housing supply.
While this is promising in the long term, the issues are very much in the short and medium term, and there were no incentives in the Federal Budget announcement to incentivise investors to including property in their asset portfolio, helping to increase the supply of rental properties, thus creating affordability in rental properties for those who can’t afford to buy.
With the Consumer Price Index (CPI) growing at the fastest rate in over two decades, inflation is tipped to rise above 7% when the next quarterly CPI announcement is released on Wednesday. While Dr Chalmers suggested that he delivered a budget that had an ‘economic dividend’ to help with the cost-of-living, in the form of more affordable childcare, cheaper prescriptions, affordable housing and wage growth in some sectors, it wasn’t a relief for all sectors of the community. There were no cash handouts, no new home buyer schemes and no immediate relief for renters in the form of a larger payment of rental assistance. Measures like stamp duty relief needs to come from the states and territories.
At Reventon, we are pleased to see that the government is committed to build in ‘well located’ areas over the five years into 2029. It will be interesting to see what the government considers is a ‘well located area.’
Here are the current statistics that need to be addressed:
- 163,000 people are on the waiting list for public housing*
- 116,000 people are currently homeless#
- While property prices have cooled down 3.4% nationally since March, they are still 30% higher than prior to the pandemic.
- Rents have increased by 10% in the past year, as demand drives, and supply reduces.
The Federal Government’s commitment to the Housing Affordability Crisis:
- As an electoral promise, the Labor Government announced that they will create a $10 billion Housing Australia Future Fund that will provide a sustainable funding source to increase housing supply.
- They will deliver 30,000 affordable dwellings as part of their Housing Australia Future Fund.
- They have also announced the Help to Buy scheme, that will enable 10,000 Australians each year to co-purchase up to 40% of a new property (or 30% of an existing property) with the government, where in time, the buyer could buy out the government’s share, or pay out the government’s share when they sell the property.
- As a Federal Budget promise, the Labor Government will provide an additional $350 million for another 10,000 affordable dwellings.
- The aim is to cover the gap between market rents and subsidised rents.
- State and Territory governments have also agreed to provide an additional 10,000 new affordable homes and will work with local governments to change zoning policies and/or land release.
These numbers are a long way away (currently, it’s a 120,000 joint commitment) from the one million new affordable homes announced last night, with an additional of 10,000 Australians per year to take up the Help To Buy Scheme. The Shadow Treasurer, Angus Taylor, is concerned that the acting government will be using people’s superannuation as ‘pet projects’ rather than fuel retiree’s retirement. He suggests that, as institutional investment is not common in Australia, we should incentivise institutions by removing tax barriers to create projects like a ‘rent to build’ scheme, to help the undersupply of rental properties.
Overall, it’s a step in the right direction, but more needs to be done sooner than later.
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