2024 Budget in review – focus on housing

In recent years, the Australian Government has set out to invest in supporting social and affordable housing, to help prevent more Australians from experiencing further economic disadvantage. This Budget reinforces and extends this focus through:

• $1 billion to be spent on crisis and transitional accommodation for women and children fleeing family violence and for youth through the National Housing Infrastructure Facility
• $9.3 billion to be provided to states and territories over five years to provide support for homelessness, crisis support and to build and repair social housing, which otherwise may not go ahead.

This five-year deal doubles the Commonwealth’s contribution of homelessness funding to $400 million annually, funding that states and territories must match.

While Prime Minister, Anthony Albanese described this budget as “less talk and more homes,” from a practical standpoint there are few incentives for developers in this Budget to boost the broader housing market.

Initial feedback from residential developers signalled relief that the Budget did not impose more direct taxes on housing development.  However, the prevailing tone is that far more needs to be done to unpeel the many barriers to delivery of housing at scale.

Some effort has been made to unlock more Build to Rent housing, which is typically quicker to deliver as these developments only require one capital partner.

Housing affordability affects everyone in Australia – including the construction sector, one of few sectors in our economy that has failed to improve in productivity for some years. Clearly there is an issue in how we deliver housing but a simple fix is unlikely.

To boost capacity in the construction sector, the government has committed another $88.8 million to cover the education costs of 20,000 more people seeking to study TAFE programs related to housing and construction, including increased access to pre-apprenticeships.

It has also set the cap for next financial year’s permanent migration program to 185,000 places, with 132,200 of these allocated to skill stream. This is designed to take pressure off the demand for housing and limit more permanent places to those who have skills we need.

Similarly, net overseas migration is forecast to halve to 260,000 in 2024–2025.

The Budget encourages universities to deliver purpose-built student accommodation (PBSA) and promises to work with the higher education sector. If this eventuates, this measure will also help to cool the impact of international student arrivals on the rental market.

While international students make up only four per cent of Australia’s rental market and are in no way to be blamed for the housing crisis, the current pipeline of new PBSA developments will not meet future needs.

While the Budget steers clear of offering incentives which would make it easier to deliver rental housing, in particular, it does deliver some help where it’s needed to Australians living in difficult times today.

These measures go some way to addressing Urbis’ recommendations  in our submission to the National Housing and Homelessness Plan. We will have to wait to see if these targeted incentives produce the relief required in our vulnerable communities and strained sectors.

The fact remains, we are currently not delivering enough homes to match the growth in need and demand – and that cycle will continue to accentuate for as long as we fail to think differently and try new ways to meet this challenge.

Get in touch with our team to learn more.