Housing ‘a big focus’ for the budget 2024/25

Over the weekend, it was revealed that the Albanese government will be rolling out new measures to help Australians “build, rent and buy”, as part of the Homes for Australia plan.

After the Prime Minister convened the national cabinet on Friday (10 May), premiers and chief ministers backed the following new measures in the upcoming budget:

• $1 billion “directed towards” crisis and transitional accommodation for women and children fleeing domestic violence and youth under the National Housing Infrastructure Facility.
• $1 billion of funding for states and territories to build infrastructure that could support new homes and for additional social housing supply (such as roads, sewers, energy, water, and community infrastructure).
• $9.3 billion via a five‑year National Agreement on Social Housing and Homelessness for states and territories to combat homelessness, provide crisis support, and build and repair social housing.

This built on the announcement that the Albanese Government would earmark $90.6 million to boost the number of construction workers, with $88.8 million for 20,000 additional Fee-Free TAFE training places to increase the pipeline of workers for construction and housing.

Speaking after the cabinet meeting on Friday evening, Prime Minister Anthony Albanese MP said: “This Budget means more tradies, fewer barriers to construction, less talk and more homes.

“This isn’t about one suburb or one city or one state. It’s a challenge facing Australians everywhere and it needs action from every level of government.”

Federal Treasurer Jim Chalmers MP said that housing was “a big priority” for the Albanese government and it would be “a big focus” of the budget this evening (14 May).

“Australia needs to build more homes more quickly and that’s what this substantial investment will help to deliver,” he said.

“We’re delivering billions more dollars in the Budget to build more homes across the country because we know that to address this housing challenge, we need to boost supply.”

Minister for Housing Julie Collins MP said: “Building more homes is the best way to address Australia’s housing challenges, and this is exactly what Homes for Australia will deliver.

“Homes for Australia will turbocharge the construction of new homes right across the country and ease the pressure on Australians doing it tough.

“We’re working across government, and with other tiers of government, to achieve the ambitious national target of 1.2 million new homes by the end of the decade.

“This will deliver more homes for home buyers, more homes for renters and more homes for Australians who need them.”

Housing support welcomed

Reacting to the news, Mark Haron, executive director at Connective, said: “Owning a home is a goal for many Australians, and any measures that make that more achievable in the current challenging environment are welcome. We’ve seen a recent increase in borrower interest, but also recognise the ongoing cautious approach.

“The mid- to long-term outlook is promising with the construction worker boost and policies announced over the weekend. This could ensure sustainable new housing activity, potentially reducing future price pressures.

“We encourage brokers to stay informed and be ready to guide clients or prospects on the additional support available come 1 July 2024.”

The Housing Industry Association (HIA) also welcomed the housing investment, with HIA managing director Jocelyn Martin saying it was “an important step forward” that would “provide an additional boost to the Housing Australia Future Fund (HAFF) to build more housing under that scheme”.

The Property Council of Australia chief executive Mike Zorbas similarly said: “Hitting the housing targets now hinges on concerted federal, state and industry partnership on rezoning, faster approvals, more skilled workers and last mile infrastructure.”

What else should the budget include for housing?

Other calls being made for housing from those in the property industry include:

More retirement and seniors’ housing accommodation

Retirement Living Council executive director Daniel Gannon said: “In order to maintain existing market demand, the retirement living industry requires 67,000 units to be built by 2030.” He suggested more investment in retirement communities – containing units that are 48 per cent more affordable than comparable homes – could “help the government solve Australia’s housing supply problem”.

Changes to annual caps on non-concessional superannuation contributions

While caps on non-concessional superannuation contributions are currently $110,000 and balance transfer caps are $1.9 million, changing these could free up additional housing stock currently held by empty-nesters.

Angus Raine, executive chairman of Raine & Horne, said this would provide greater incentives for retirees to sell their existing investment properties and transfer the sale proceeds into “the lightly-taxed superannuation environment”.

Raine said: “In cities such as Sydney and Melbourne long-term property investors are likely to have made a substantial capital gain from their rental property. This could see many investors breach the balance transfer caps if they want to transfer sale proceeds of a property investment into super.

“Disregarding the impact of capital gains tax (CGT), the caps that apply to non-concessional contributions together with the balance transfer cap of $1.9 million, act as a real disincentive for retirees to sell a rental property and deposit the proceeds into super.

“The value of the property in many capital cities could see retirees breach the balance transfer caps, so the government needs to consider increasing this cap significantly in next week’s budget as a way of flushing out assets held by older investors to help address housing shortfalls.”

Pegging the Commonwealth Rent Assistance program to market rental values

The Commonwealth Rent Assistance (CRA) program – which provides support to tenants receiving specific social security payments such as Newstart Allowance, Disability Support Pension, or age pension and those who are not residing in public housing – is currently pegged to the Consumer Price Index.

However, Maria Milillo, head of property management at Raine & Horne, said the government could further support vulnerable renters if it changed the CRA so it moves in line with market rentals.

“CPI is increasing by 3.5 per cent in the 12 months to March 2024, yet aggregate rental prices are up 7.7 per cent,” Milillo said.

What would you like to see in the federal budget tonight? Let us know in the comments below!

[Related: HIA welcomes budget boost for skilled workers]