More help needed for housing goal – Ray White

The Australian government has launched the $11.3 billion Homes for Australia initiative to tackle housing challenges, but a Ray White economist believes more action is needed to meet the goal of building 1.2 million new homes.

Homes for Australia: Major funding allocations

The plan allocates $9.3bn over five years to tackle homelessness, enhance crisis support, and fund the construction and repair of social housing. An additional $1bn is earmarked for essential infrastructure like roads and sewers, which are crucial for new housing developments. Another $1bn will go towards crisis and transitional accommodation for women and children escaping domestic violence.

“Fundamentally, the role of the federal government is to provide housing for our most vulnerable, and this is what the budget does,” said Nerida Conisbee (pictured above), chief economist at Ray White.

Education and workforce support

The budget also focuses on boosting student accommodation in collaboration with the higher education sector and proposes $90.6m to enhance the construction workforce. This includes funding for TAFE and facilitating skilled migrant visas to address labour shortages.

Immediate financial relief

Renters will see immediate benefits with a 10% increase in Commonwealth rent assistance for nearly 1 million recipients. This adjustment aims to mitigate rental hikes and potentially influence broader economic factors like inflation.

Challenges in meeting housing goals

Despite these measures, Conisbee highlighted the ongoing issue of housing supply, which remains the “biggest challenge at the moment.”

There are several challenges in achieving the government’s ambitious target of 1.2 million housing units. These are as follow:

• Planning and regulatory hurdles: Although some progress has been made in planning reforms, more is needed to ensure the housing goal is feasible.
• Funding constraints: With federal debt at record highs, finding the financial resources for these housing initiatives is increasingly challenging.
• Construction industry strains: The sector faces ongoing issues such as high construction costs and labor shortages, despite recent budgetary provisions aimed at alleviating some of these problems.

Potential solutions and missed opportunities

Conisbee suggested looking to foreign investors and encouraging build-to-rent schemes as potential ways to boost housing stock.

Conisbee also noted that leveraging “mum and dad” investors could significantly increase rental housing availability.

“A program similar to Homebuilder but for investors would get more homes built for renters, quickly mobilizing funding from the investors that hold around 90% of rental properties already,” Conisbee said.

Read the Ray White article in full here.

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