The priority items in the budget wish list of housing specialists include a major social housing build, an increase in rent aid, and more efforts on energy efficiency.
However, they are not hopeful, as recent federal budgets have taken a rather disjointed strategy in addressing the housing affordability issue.
Rising Housing Costs
All government departments have a responsibility towards exorbitant housing values, and experts and industry groups are urging them to cooperate and grab the opportunities presented by the post-pandemic recovery.
Australia needs a massive increase in funding social housing, as this would provide more homes for those who can’t afford it and would generate employment for the construction industry. In addition, studies show that even before the pandemic, the lack of affordable rental homes for lower-income workers forces some to quit their jobs, leaving employers short of lower-paid workers.
More Support for Aboriginal Housing
There are also calls to provide more funding for Aboriginal housing and crisis and homelessness services, as well as Commonwealth Rent Assistance.
This is contrary to the steps that had been taken in recent years, like propping up construction jobs via the HomeBuilder grants for purchasing or constructing new homes, or the First Home Loan Deposit Scheme that allows first-home buyers to buy with a deposit that’s as low as 5%.
These are piecemeal measures that are politically popular, but they are empty policy-wise. The First Home Loan Deposit Scheme attracted high take-up every time a tranche of 10,000 places is launched to signal a financial year. For HomeBuilder, over 121,000 Australians have applied for the scheme.
Alarms have been sounded that demand-side grants increase house prices, and the other measures have not been as popular.
For example, just 15,000 Australians chose to downsize and pay a lump sum to super in the two years since the launch of the downsizer superannuation incentive – a tiny percentage of the four million Australians over the age of 65. Downsizer schemes are aimed at releasing a larger housing supply for upsizing families.
A government reverse mortgage scheme attracted just 3771 Australians as of December 2020, even with the issue of older Australians having assets tied with the family home and meager cash flow.
Calls for Increase in Commonwealth Rent Assistance
This year’s budget should also include an increase in the rate of Commonwealth Rent Assistance.
People who own their homes in retirement would do reasonably well. On the other hand, a renter is at a serious risk of poverty.
Experts would like to see government support in boosting the economic security of women, as older women comprise the fastest-growing group of homeless Australians.
Calls for Planning Reforms
In addition to social housing, they would also welcome planning reform. Though the federal government doesn’t oversee planning rules, it could incentivise state or local governments to increase housing construction in inner- and middle-ring suburbs. This could be medium-density housing or housing near major transport routes.
There had been “city deals” in previous budgets, but these could fall victim to electoral politics such as going after aiming at marginal seats at elections, meaning the better strategy is a program designed to push states to implement the reform.
It is the same as the call for “housing deals” from the Property Council of Australia during its pre-budget submission. This also aims to encourage state governments to amend planning systems.
Planning supply issues have always been in the top five productivity cripplers for the country, according to the Productivity Commission.
As Australia comes out of the pandemic the supply problem remains significant and will possibly continue to have a major effect on housing affordability in the years to come, so a kind of urgency for it is warranted. Even more so now with the current outbreaks or Covid-19 and lockdowns taking effect for the next 2 weeks.
Mass Energy-Efficient Retrofitting Program
There are also calls for more purpose-built affordable housing and a boost to construction jobs by way of a mass energy-efficient retrofitting scheme as HomeBuilder expires. Incentives to retrofit can support more job creation, but a sustainability dividend should accompany it.
Even with the HomeBuilder scheme, jobs in the construction sector remain at 3.8% below their March 2020 figures.
Improving social housing instead of subsidising private housing demand would provide the extra benefit of energising employment without worsening property market inflation, as what happened with HomeBuilder.
Getting support is a proposal by the Community Housing Industry Association to construct 30,000 social housing units over a period of three or four years, generating 18,000 jobs.
The Real Estate Institute of Australia backed the First Home Loan Deposit Scheme but also requested for more support for first-home buyers. They argued that first-home buyers should be entitled to claim interest cost as a tax deduction, in the same way as investors.
It’s perhaps not a terrible move to put first-home buyers and property investors on equal footing. First-home buyers had returned to the market but now we are currently seeing these first-home buyers squeezed out of the market by investors all over again!