Australia will build at least one million homes over the five years from 2024 if targets under the Commonwealth Government’s plan to address housing supply and affordability challenges are achieved.
Unveiling the Commonwealth Budget for 2022/23, Treasurer Jim Chalmers announced that the Federal Government has signed an accord with state and local governments as well institutional investors and major construction industry groups which outlines agreed actions to tackle the nation’s housing affordability crisis.
Known as the National Housing Accord, the agreement sets out a shared ambition to deliver as many as one million new homes which are close to services and employment over the five years commencing in 2024 – an average of 200,000 homes per year.
This would signal a rate of dwelling construction that is similar to the frenetic pace of recent years, which saw 995,352 new homes completed over the five years to December 2021.
It would also imply a faster rate of dwelling construction compared to that which is currently anticipated.
As things stand, Housing Industry Association expects that new home commencement numbers will amount to 196,000 in 2022 and 2023 before dropping back back to around 185,000 in 2024 and 2025.
It is expected that most of the new housing will be delivered by the private sector.
As part of the accord:
- The Commonwealth will invest an extra $350 million to deliver an extra 10,000 homes over five years from 2024. This funding will provide incentives for superannuation funds and other institutional investors to make investments in social and affordable housing by covering the gap between market rents and subsidised rents. This commitment is in addition to the 30,000 new social and affordable dwellings which will be delivered under the Housing Australia Future Fund (see below).
- State and territory governments will build on this commitment by providing in-kind or financial contributions which enable the delivery of a further 10,000 homes. These are in addition to the 10,000 additional homes to which the Commonwealth has committed and bring the total number of new dwelling commitments to 20,000.
- State and territories will expedite zoning, planning and land release for social and affordable housing.
- The Commonwealth will provide financing options through the Housing Australia Future Fund (see below) to facilitate institutional investment in social and affordable housing.
- The Commonwealth and States will work with local governments to deliver planning reforms and free up landholdings.
- Institutional investors will work constructively to leverage the aforementioned Commonwealth investment and to leverage institutional capital to deliver more social and affordable housing.
- Construction sector peak bodies will 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.
The latest announcement builds on the government’s strategy to address housing affordability concerns in Australia.
Other initiatives as part of this include:
- A $10 billion Housing Australia Fund to provide a sustainable funding source to increase housing supply and improve service delivery. The Fund will help build 20,000 new social housing dwellings, 4,000 of which will be allocated to women and children impacted by family and domestic violence and older women at risk of homelessness. It will also help build 10,000 new affordable housing dwellings, including for frontline workers. This is in addition to the new commitments above under the accord.
- Working with states and territories to establish a National Housing and Homelessness Plan, which will establish a national strategy for housing and homelessness and will establish short, medium and long-term goals over the next ten year.
- Providing $15.2 million to establish a National Housing Supply and Affordability Council which will independently advise the government on housing policy.
- Bringing together leaders from the investment community including superannuation funds, major banks and global asset managers under a newly established forum known as the Treasurer’s Investor Roundtable. This will meet next month and will explore further areas of work to promote investment in housing.
Building industry lobby groups welcomed the announcement.
“The 2022 Housing Accord announced in tonight’s Budget is a welcome signal to the building and construction industry who have been crying out for action to address housing affordability barriers and supply constraints,” Master Builders Australia CEO Denita Wawn said.