The federal Treasurer has pledged to bring online a million more houses, with affordable housing a key element of its budget 2022/23. We take a look at the housing measures in the latest budget.
The Australian Labor Party (ALP) has released its first federal budget since coming into power in May 2022, announcing a range of measures aimed at “strengthening” the economy, “improving” the budget’s bottom line, and providing cost-of-living relief for families “without putting pressure on inflation”.
The budget — which Treasurer Jim Chalmers MP had foreshadowed would provide “cost-of-living relief in a responsible way but not a reckless way” given rising inflation (projected to rise to peak at 7.75 per cent later this year, before moderating to 3.5 per cent in 2023–24) — aims to reduce the deficit and curb spending.
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Released on Tuesday, 25 October, the 2022–23 October budget focuses the bulk of government spending on health, education, aged care, and defence.
It also covers sustainability and looks to track and measure wellness for the first time, too.
Mr Chalmers said the $7.5 billion package was a five-point plan for cost-of-living relief:
- Cheaper childcare
- Expanding paid parental leave
- Cheaper medicines
- More affordable housing
- And getting wages moving again
The Treasurer said it would help “put some money back in people’s pockets, boosts productivity, and grows the economy — but it’s carefully targeted and carefully timed, so that it avoids placing additional pressure on inflation”.
Building a million homes
Among the measures relevant to the mortgage industry are a range of investments relating to affordable housing.
This includes the $10 billion Housing Australia Future Fund (to be managed by the Future Fund Management Agency) to build 30,000 social and affordable homes over five years.
The fund will provide 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 provide 10,000 new affordable housing dwellings, including for frontline workers.
The Treasurer has said that a “high priority” for the government was bringing online “more affordable housing closer to where the jobs and opportunities are”.
It comes as the country faces high property prices and a dearth of rental properties, pushing rents higher and adding strain to household budgets.
As such, a National Housing Accord — which has been developed following months of consultation with state governments, the building industry, and members of the superannuation industry and institutional investors — forms part of Labor’s plan to help build a million “new, well-located homes” over the next five years.
The budget earmarks an additional $350 million in funding under the accord, which will help incentivise superannuation funds and other institutional investors to make investments in social and affordable housing. This aims to help deliver another 10,000 affordable homes over five years from mid-2024 “as capacity constraints are expected to ease”.
The new builds will need to have an energy efficiency rating of seven stars or greater (or a state or territory’s minimum standard).
This will be delivered through an ongoing funding stream to help cover the gap between market rents and subsidised rents — making more projects commercially viable.
There will be ongoing availability payments over the longer term to deliver an additional 10,000 affordable dwellings.
States and territories will also support up to an additional 10,000 affordable homes, increasing the dwellings that can be delivered under the accord to 20,000.
“The combination of a more secure pipeline of supply and government support through innovative financing will facilitate cost-effective superannuation and institutional investment in affordable housing,” the budget documents read.
It is expected that the Treasurer’s new investor roundtable (set to meet this month) will help push this agenda forward.
State and territory governments will also help expedite approvals for social and affordable housing when it comes to zoning, planning, and land release, for example.
Home Guarantee schemes and Help to Buy
The Labor Party will also continue to fund the Coalition government’s First Home Guarantee and Family Home Guarantee.
It will also roll out a new Regional First Home Buyer Guarantee that will support 10,000 new home owners each year to 30 June 2026.
The budget also sets aside money for its new Help to Buy Scheme (set to commence from July 2023).
The government will spend $324.6 million over four years from 2022–23 to establish the Help to Buy scheme to assist people on low to moderate incomes to purchase a new or existing home with an equity contribution from the government.
The shared equity scheme (first pitched during the ALP’s election campaign) involves an equity contribution from the federal government of up to a maximum of 40 per cent of the purchase price of a new home (and up to a maximum of 30 per cent of the purchase price for an existing home).
Buyers would only need to have a deposit of at least 2 per cent and they will not need to pay lenders mortgage insurance (LMI). There will be 10,000 places each financial year.
Mr Chalmers noted that this will therefore allow up to 40,000 eligible Australians to own their own home “with a lower deposit and smaller mortgage”.
The program will be open to Australians with a taxable income of up to $90,000 per annum or for couples with a combined income of $120,000 who currently don’t own or have an interest in a residential property. It is not only open to first home buyers.
