(September 2023 Blog) The New Plan To Solve Australia’s Housing Crisis
Australia is facing a critical undersupply of housing, with the National Housing Finance and Investment Corporation (NHFIC) recently warning of an expected deficit of more than 100,000 homes by 2027.
With the housing shortage already putting upward pressure on rents and home values, the National Cabinet announced an updated national target to build 1.2 million “well‑located” new homes over five years from July 2024.
This is an extra 200,000 on top of the 1 million agreed to by the states and territories last year, with the federal government promising a “new homes bonus” of $15,000 for every home delivered over and above the old target.
An additional $500 million in competitive funding is also being set aside to incentivise local and state governments to accelerate housing projects.
"All governments recognise the best way to ensure that more Australians have a safe and affordable place to call home is to boost housing supply," Prime Minister Anthony Albanese said in the press conference.
Mr Albanese also announced several rental reforms to help "harmonise and strengthen renters’ rights across Australia”, including:
Moving towards national consistency on requiring reasonable grounds for eviction
Limiting rent increases to once per year
Phasing in minimal rental standards
However, he rejected the Green's calls for a rent freeze, saying that no jurisdiction believed it would make a positive difference to skyrocketing rents.
“Indeed, we believe that will make it worse. The key to addressing these issues is supply and that's why we have focused our attention on supply,” he said.
A reality check on government plans
Australia needs to build 240,000 new homes every year to meet the new housing target.
And while it’s certainly an ambitious goal to be lauded, all the current indicators suggest we’re way off track, with:
Sales of new homes plunging 33.4% in the June quarter when compared to the same quarter in 2022
Residential land transaction volumes plummeting 37.0% over the 12 months to March 2023
At the same time, demand is rocketing, with the Centre for Population projecting that Australia will grow by an additional 2.18 million people by 2027.
This doesn’t bode well for Australia’s housing crisis, given that when demand outweighs supply, prices generally rise.
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