Federal Budget lock up is just under a week away and whilst severely limited in numbers, it will be one of the most unusual that I will have been to in over 20 years, not just in the small numbers invited to the Treasury Building in Canberra, but on what it will bring.
For housing policy the Federal Budget comes off the back of the largest building pipeline still being completed to a challenged and rapidly declining market supply with certain growth in social demand. What masks decisions in October is that ABS will report in two weeks time that around 193,000 homes will be completed nationally for the last financial year which is 30-50,000 homes above underlying demand and 20 year averages. With recent NHFIC pre COVID underlying demand estimated at around 162,000 homes requirement roughly each year this means that elevated new delivery could equate to around 250,000 new dwellings having been oversupplied in those 6 years.
With this backdrop there are reports that there is no available land in parts of the country such as Perth, Adelaide and regional locations such as Bundaberg with lot sales through the roof. With such a number of homes to wash through and the perception that the market is holding up, there may be a view that housing will sort itself out.
From the broader numbers and updated reports there are around 400,000 mortgagees that are currently not paying back their loans which in many cases the homes securitise small business loans, other loans and investment properties. Of these there will be a number that default and with JobKeeper winding down there will no doubt be additional demand for social and affordable housing by the end of 2020.
Whilst the market may look to be holding up at the moment, it is worth reflecting that there were already 200,000 on the national housing waiting lists as we headed into 2020 and well over 100,000 defined as homeless at the last census.
From our recent discussions directly with Minister Michael Sukkar MP and Assistant Minister for Community Housing and Homelessness Luke Howarth MP, there will not be significant investments in social housing expected at the Federal Budget. There will be some announcements such as this week’s domestic violence funding which is welcomed but unlikely to see the GFC type outcomes with 35-45,000 new social and affordable homes stimulated. At least not yet.
But while its been a long cold winter we head towards a well-earned warmer break, there will be many that do not face this prospect. There will be many that for them the prospects for 2021 are very dim and this Christmas may be the last that they know in their home, near the kids school, that was located within commute of the job that is no more.
2021 does not have to be that way and providing a stable housing market with national leadership and support is a must.
Constructing 30,000 homes over the next several years will sure up jobs, provide a calm hand on the shoulder of a market that will be challenged in the near future to provide the additional homes that housing market decline will demand and that additional social demand needs.