The federal government is pledging to address the housing supply and affordability crisis by targeting to build one million well-located homes over five years starting 2024 — is this commitment enough to address the problems hounding the sector?
The National Housing Accord is a landmark agreement among all levels of government, institutional investors, and the construction sector to help address the housing supply problem.
On top of the promise to build one million homes, the Accord covers a range of action points that will help shape sustainable, and long-term plans for additional housing and affordability:
- State and territory governments will expedite zoning, planning, and land release for social and affordable housing.
- The Commonwealth will provide financing options through the Housing Australia Future Fund to facilitate institutional investment in social and affordable housing.
- The Accord will work with local governments for planning reforms and freeing up landholdings.
- The construction sector will support high energy efficiency rating in construction.
During the Budget, the federal government also announced a $350m worth of additional funding to deliver 10,000 affordable homes over five years from 2024, on top of its existing 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.
State and territory governments also pledged to build on this commitment, with up to 10,000 new homes.
State and territory governments support
Several state and territory governments have already expressed support and accompanying plans for the National Housing Accord.
New South Wales Treasurer Matt Kean said these announcements build on the $2.8bn housing investment the state made in its June Budget, which is aimed to support first-home buyers, deliver more affordable housing, and free up more land for new houses.
“NSW will continue to explore further opportunities to free up landholdings for affordable housing under the Accord which builds on our existing commitments and will deliver even more housing from 2024-25 onwards,” he said.
ACT chief minister Andrew Barr said the territory government unveiled the biggest package of commitments to tackle affordability and supply of housing.
“This includes investments to attract Build to Rent developments in the ACT, further targeted stamp duty cuts, the construction of hundreds of new public housing dwellings, increased land supply and continuing planning reform,” he said.
Mr Barr said more needs to be done and the territory is exploring additional new policy directions to improve housing affordability for low-to-medium income Canberrans.
“This includes affordable home purchase schemes, build-to-rent projects with affordable components, shared equity schemes, demonstration housing projects, opportunities to enhance community housing, and working with the Commonwealth on the National Rental Affordability Scheme,” he said.
Northern Territory Chief Minister Natasha Fyles said the territory government is looking forward to delivering projects in partnership with the federal government, which includes the $2.5bn investment for key infrastructure projects, along with more housing, investments in remote communities, and more places for Territorians at university.
“My team and I have been working with the Federal Government when it comes to items of key enabling infrastructure, remote and urban housing, education, environment and renewables — we will continue to work with the Federal Government to make sure we continue to develop our region, improve our cost of living, and improve our social inequalities,” she said.
1 million homes — is this enough?
Master Builders CEO Denita Wawn said new home building starts will fall significantly short of 200,000 per year, the volume of output that will be needed to meet demand.
“Master Builders Australia will work constructively with governments and industry to deliver the joint housing target of one million new, well-located homes over five years from 2024,” she said.
“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.”
Meanwhile, Housing Industry Association (HIA) managing director Graham Wolfe said the Accord will help identify ways to maintain a stable level of housing supply.
“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,” he said.
“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 1 million new homes.”
Mission Australia CEO Sharon Callister said the announcement of the Accord is a “very promising” beginning for improving housing affordability.
“The announcement of the National Housing Accord acknowledges that the stark shortage of social and affordable housing, soaring cost of renting and resulting rental stress, declining availability of affordable rentals and rising cost of living are currently accelerating Australia’s housing and homelessness crisis,” she said.
However, she urges the government to include Community Housing Providers as an essential stakeholder in discussions on housing and affordability.
“Finding a safe, secure, and affordable place to call home and being able to afford life’s essentials are ever-pressing needs for many people on low and middle incomes. We need to ensure that these measures work for those most in need.”
Property Investment Professionals of Australia chairperson Nicola McDougall said while the Accord is a sound strategy, it must be noted that the federal government’s plan only includes its own commitment to actually construct 40,000 social and affordable homes across the nation.
“This is a drop in the ocean compared to what is needed — according to the Australian Bureau of Statistics, nearly one million dwellings were reportedly constructed in the five years to March this year,” she said.
“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.”
RSM Australia Property & Construction National Leader Adam Crowley said the devil will be in the details on how the construction sector will be engaged in the delivery, particularly when the sector already delivered a million dwelling previously without stimulus.
“The value of building work yet to commence has climbed 19% over the past year to a record $12bn, including about $71bn worth of new residential homes, apartments and townhouses,” he said.
“The slowdown in new dwelling commencements and the longer-lead indicator of building approvals over the past year, comes at a time when parts of Australia are experiencing extreme rental stress and more international migrants are due to call Australia home after the Federal Government lifted the permanent intake to 195,000 in 2022-23.”
InvestorKit founder Arjun Paliwal commended parts of the Accord but said the Budget has failed to hit the mark.
“Many fail to understand that we are to see circa 200,000 incoming migrants with the cap lift each year and that Australia typically sees 450,000-550,000 housing transactions per year — an announcement of 10,000 places here and there or similar building trends over the last five years being repeated isn’t enough,” he said.
“More work needs to be done on creating greater motivation for stock mobility amongst established houses to levels of the past, a larger pool of private investors, city changing infrastructure, some of which was approved with rail and highway works, combined with larger levels of new building.”
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Photo by Patrick McLachlan from Pexels.
