The Labor Government has pulled a policy rabbit from its budget hat with the pledge to build one million new well-located homes over five years from 2024[i].

 The announcement is the headline act in the Government’s National Housing Accord, a landmark agreement to address one of our nation’s most significant economic challenges: the supply and affordability of housing.

The Accord intends to align the efforts of all levels of government, institutional investors, and the construction sector for the first time to help tackle the nation’s housing problem.

 To build 1 million homes, Julie Collins, Federal Minister for Housing, said the Accord recognises most of this supply needs to come from the market, with the government playing a pivotal role in enabling and kick-starting investment.

Angus Raine, Executive Chairman, Raine & Horne, cautiously welcomed the announcement, commenting that 1 million homes is 10 times the size of Townsville.

“This also equivalent to almost two Adelaide’s[ii] seems a tall order given we have a shortage of tradies in Australia and building materials.

“The increase in the number of permanent migration visas available in 2022-23 from 160,000 to 195,000 places[iii] might address some of the labour resources needed to build 1 million new homes.”

Affordable housing addressed 

 The Budget delivers $350 million in additional Federal funding to deliver 10,000 affordable homes over five years from 2024, on top of the government’s existing election commitments. This funding will incentivise superannuation funds and other institutional investors to invest in social and affordable housing by covering the gap between market rents and subsidised rents.

State and territory governments have also agreed to build up to 10,000 new homes, delivering up to 20,000 new affordable dwellings.

While these initiatives won’t begin straightaway, the Accord also covers a range of immediate actions and areas for further work to support a sustainable, long-term pipeline of additional housing supply and help take pressure off affordability, 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
• 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.

These commitments are tailored and timed to current conditions faced by the industry. They recognise and help manage current capacity constraints and support greater stability in the housing supply pipeline.

 Incentivising downsizing

 The Government is extending the exemption of home sale proceeds from pension asset testing by 12 months and is expanding access to make downsizer contributions to superannuation for people aged 55 to 59[iv].

Angus Raine has been urging the government not to means test any empty nesters regardless of whether they are on pensions or self-funded retirees. 

 “I have also urged state and territory governments to consider stamp duty exemptions for older Australians aged 60 or over. This tax obstructs the plans of empty nesters as it eats away at their retirement nest eggs.

“By encouraging empty-nesters to move into more age-appropriate housing, we can address some long-term supply issues and create more housing options for expanding families.”

Angus added, “I’d like to see more done to unlock the vast store of wealth held by empty nesters with all homeowners over 60 exempted from any curbs to downsizing, whether it’s the asset test or the need to pay property taxes.

“In some parts of the country, empty nesters have occupied their homes for 20, 30 or even 50 years, so they need an extra incentive to sell up.”

[i] https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/speeches/budget-speech-2022-23

[ii] https://www.abs.gov.au/census/find-census-data/quickstats/2016/4GADE

[iii] https://minister.homeaffairs.gov.au/ClareONeil/Pages/australias-migration-future.aspx

[iv] https://budget.gov.au/2022-23-october/content/overview/download/budget_overview.pdf