Australia’s housing crisis will get worse before it gets better and the Albanese government is under increasing pressure to do more to fix it in next month’s budget, according to a new report.
Stephen Smith, a partner at Deloitte Access Economics, said the nation has not been building enough housing to keep pace with the record influx of immigrants.
Along with this growing demand, supply was affected by the bankruptcy of many construction companies due to increasing costs, and those that continue to work with an accumulation of half-finished houses.
“The cost of land, materials and labor will remain at higher levels, while recent bankruptcy rates suggest that builders will need higher profit margins if they are to achieve the significant increase in housing that governments and the community are crying out for,” he said in the company’s latest business outlook report.
Smith warned that these factors would take years to change, so the housing shortage and resulting skyrocketing property prices and rents will “get much worse before they get better.”
A backlog of half-built homes and new development jobs is set to worsen Australia’s housing crisis, experts say (file image)
The economist was not confident that the government’s target of building 1.2 million homes from mid-2024 would be met, as highlighted in the latest industry forecasts.
Even that number could not keep up with the record influx of immigrants designed to artificially stimulate GDP.
The worrying state of the housing market has homebuilding industry groups, welfare advocates and federal independents clamoring for more action ahead of the May 14 budget.
Companies such as the Master Builders Association and the Property Council have teamed up with the Community Housing Industry Association, the Australian Council of Social Services and housing affordability advocates to call on the government to double the size of their future housing fund.
In a letter to Prime Minister Anthony Albanese, the housing alliance said increasing the size of the fund to $20 billion would help the government meet its housing construction target.
Returns from the fund are used to publicly subsidize social and affordable housing developments, and the existing $10 billion fund is expected to help build 30,000 homes over five years.
Booming industry and social support industries have noted that rental affordability figures are at “the worst they’ve ever been” (pictured, tenants queuing up for an inspection
Anglicare Australia wants higher social security payments, more social housing built and tax-free renovations for investors following the damning finding of its latest rental affordability report.
It found that rental affordability was “the worst it’s ever been,” with only 13.4 percent of rental listings considered affordable for a two-parent family of four on the minimum wage.
Key independent senators David Pocock and Jacqui Lambie have been pushing for tax reform for investors by removing tax concessions on negative gearing and capital gains for those buying rental properties.
Parliamentary Budget Office modeling suggests modest changes could save the federal budget $16 billion over a decade, which they say could be used to build more social and affordable housing.
However, removing such concessions risked people not buying rental properties, which would only exacerbate the rental housing shortage and drive up prices further.
Housing policy spans all levels of government and the Commonwealth has become increasingly active in this space.
It has introduced the Housing for the Future Fund, is working on a national housing and homelessness plan and is trying to legislate its Help to Buy shared equity scheme.
Housing Minister Julie Collins said the government’s reform agenda was ambitious.
“More help for homebuyers, more help for renters and more help for Australians who need a safe place to spend the night,” he said.
Prime Minister Anthony Albanese has been asked in May’s budget to provide more help to both the construction industry and social services.
The Property Council of Australia, National Shelter, Housing Industry Association, Community Housing Industry Association, ACOSS, Master Builders Australia and Homebeing Australia want Australia’s Housing Future Fund to be doubled to 20 billion dollars in the budget.
In an open letter to the Prime Minister, they also call for the draft national housing and homelessness plan to be published for greater industry involvement.
Anglicare Australia’s latest rental affordability report found the housing crisis is “the worst it has ever been”. The social welfare group is calling on the government to build more housing, reform the tax system and increase social security payments.