As Anthony Albanese settles into his new role as Australia’s 31st Prime Minister, experts are calling for urgent action to address the country’s housing affordability “crisis”.
While the Labor Party made a handful of election commitments focused on property, including a shared equity scheme and a social housing construction target, industry groups warn much more needs to be done to have a meaningful impact.
House prices across Australia surged over the past few years, making homeownership difficult for more people, including first-timers, while the rental market is also under significant pressure with supply dwindling and prices rising.
The Real Estate Institute of Australia said a National Housing and Homelessness Plan is a “critical priority” for the incoming government.
The group’s president Hayden Groves urged Mr Albanese to devise “innovative solutions to unlock supply” to address a worsening affordability.
“An evidence-based approach to a National Supply and Affordability Council with the right objective experts – including real estate practitioners – should provide a proper annual benchmark for Australia’s supply crunch,” Mr Groves said.
Push for more ambitious policy
Labor’s election commitment of constructing 6000 new social and affordable housing dwellings per year for five years is “a drop in the ocean”.
That’s the view of Nicola McDougall, chair of Property Investment Professionals of Australia, who said what’s needed to provide accommodation for Australia’s current and future population.
“With overseas migration set to soar over coming years, where are these new Aussies going to live if we don’t even have enough rental properties to house our current population?” Ms McDougall said.
“A system needs to be developed to encourage the private and public sectors to work collaboratively together to increase rental supply and to improve rental affordability for tenants.”
Much more needs to be done to boost the supply and social and affordable housing, property groups say. Picture: Getty
The Community Housing Industry Association said the scheme is a “great start” but said there’s much more to do.
“Social housing has reduced to less than one in twenty homes across Australia,” the group’s chief executive Wendy Hayhurst said.
“That’s because public and community housing has grown by only 4% over the past 25 years while our population has increased by 30%. Only 1% to 2% of housing built each year is social and affordable housing – far short of the 16% we managed in 1950s and 1960s.”
There are an estimated 40,000 vacant rental properties around the country at present, equating to a vacancy rate of just 1.1%, SQM Research reported this month.
“This data shows that there are about 35,000 fewer vacant rental properties now than there was three years ago, which clearly highlights the current rental crisis,” Ms McDougall said.
“The commonly accepted equilibrium point of a balanced rental market is a vacancy rate of three per cent, with many markets around the nation recording rates of below even one per cent.”
Help To Buy kinks to iron out
Labor’s election commitment of implementing a shared equity scheme for those who do not currently own a property has been broadly welcomed by property groups.
However, potential issues with the policy were raised during the campaign, including questions over when or how participants can purchase back the government’s portion of their homes.
“A critical part of the success of Help to Buy will be the option for customers to buy back the equity stake that government takes over the long term to return to the private property market,” Mr Groves said.
Labor’s shared equity scheme is positive but there are some kinks to iron out. Picture: Getty
There were also calls to increase the number of places on offer in the scheme, which is currently just 10,000 per year.
And concerns about the program driving up demand while not addressing supply have also been raised, especially in Australia’s most expensive markets of Sydney and Melbourne.
Building sector crying out for help
Significant pressures on the residential construction sector show no signs of easing anytime soon, and the new government should work swiftly to address them, the Urban Development Institute of Australia said.
The group’s national president Max Shifman said a shortage of land, labor and materials have pushed up costs and caused significant delays when it comes to completions.
“We call on the new government to act quickly to implement complementary initiatives, such as bringing forward training programs and skilled migration,” Mr Shifman said.
“We also hope the new government will look closely at incentivising states and territories to boost development ready land, fast track enabling infrastructure and streamline planning and approvals to maximize housing affordability,” Mr Shifman said.
A perfect storm of factors will see pressure on the home building sector continue through 2022. Picture: Getty
Time to dump stamp duty
The UDIA also called for the new government to assist states to reform stamp duty, which is considered to be a major barrier for homebuyers.
Mr Shifman said the Commonwealth could play a major role in seeing the tax on property purchases become a thing of the past.
Urban Taskforce chief executive Tom Forrest agreed and said Mr Albanese could take the lead, beginning discussions with states on abolishing stamp duty and replacing it with a broad-based tax.
“This reform will stimulate housing market transactions and activity, and more fairly generate funds for new infrastructure that will enable growth and stimulate the economy,” Mr Forrest said.
“This is a policy reform supported by economists across the spectrum.”
He pointed out that every tax review since 1984 had recommended the removal of property transaction taxes because of their negative and inefficient economic consequences.
Anthony Albanese has been sworn in as the 31st Prime Minister of Australia. Picture: Getty
More market pressure coming
While housing price growth is slowing across much of Australia, driven largely by rising interest rates, the drop in buyer demand could be short-lived.
Buyer’s agent Pete Wargent, co-founder of BuyersBuyers, said the imminent resumption of migration will put “significant” pressure on real estate markets.
“Demographic trends may be a little haphazard in the short term, and it will take time for border movements to normalize fully, but the new government is likely to embrace strong immigration,” Mr Wargent said.
“As a result, we expect the population growth rate to return to its recent ‘normal’ of around 1.5%, or perhaps a little lower, which adds significantly to housing demand.
“For example, 1.4% population growth would equate to a population increase of around 360,000 persons per year.”
The rental market is under significant pressure, with soaring demand and dwindling supply pushing up prices. Picture: Getty
At the same time, he believes “a dearth of new supply” will characterize much of the housing market in coming years.
Nationally, the rental vacancy rate has collapsed to about 1% and asking rents have risen by between 10 to 20% over the past year, and more in several regional areas, he pointed out.
“Rental vacancy rates in many parts of the country are at levels associated with a rental crisis,” he said.
“Meanwhile, building approvals are falling away sharply, and with the costs of materials and construction steepling, many of the dwellings under construction may not be completed in a timely manner, with construction insolvencies making recent headline news.
“In terms of stock for sale, more vendors have listed properties this year, but to date, there has still been come caution, and stock levels around much of Australia remain relatively tight for the time being and well below their 5-year average across the capital cities.”
Anthony Albanese has been urged to devise more ambitious policies to tackle housing supply and affordability. Picture: Getty
A long-term strategy is needed
Housing should be recognized as a basic human right and the new government should devise and implement a long-term generational plan for affordable and social housing, the Australian Institute of Architects said.
National president Tony Giannone called for a 30-year National Housing strategy that is centralized and monitors supply and establishes tangible targets.
“Social housing and affordable housing initiatives need to be delivered for the long term, not for the next election,” Mr Giannone said.
“A decades-long, funded strategy will help to overcome the challenges of housing stress and unaffordability, and ultimately make Australia a better society where everyone has a home.
“Bipartisan support is necessary to make this happen, and honestly, who could argue against it?”