Source : the age
Australia remains in the grip of a housing crisis, with Prime Minister Anthony Albanese on track to fall 262,000 short of his 1.2 million target for new homes by the end of the decade, the government’s own independent adviser on the sector has warned.
In a damning report, the National Housing Supply and Affordability Council has used its annual report into the state of the industry to argue all levels of government need to find ways to free-up more land, slash construction costs and overhaul taxes that are restricting new building.
Anthony Albanese surveys a new home being built in suburban Melbourne during the election campaign. His government is on track to fall well short of its target of building 1.2 million homes.Credit: Alex Ellinghausen
NSW alone is expected to fall 130,000 homes short of its share of the 1.2 million target, the centrepiece of the government’s Housing Accord, while Victoria is forecast to be just 6000 short.
Policies to boost home construction were a key part of the recent election campaign, in which Labor promised to reduce required deposits for first-time buyers to just 5 per cent of a property’s asking price. It is also pledging to pump $10 billion into building 100,000 properties for first home buyers.
But council chair Susan Lloyd-Hurwitz said an urgent, concerted effort by government and industry was needed to find new ways to deliver affordable housing.
“The Australian housing system remains far from healthy and is continuing to experience immense pressure,” she said.
“The nation is still very much in the grips of a housing crisis that has been decades in the making through our persistent failure to deliver enough homes to meet demand.
“For many Australians right across the country, the ability to access an affordable, fit-for-purpose and secure home remains a challenge, if not out of reach entirely, and is a source of significant stress.”
Once expected demolitions of about 113,000 buildings are taken into account, the council believes net new housing supply by mid-2029 will be 825,000. But housing demand is expected to be 904,000 over the same period.
If the Victorian and NSW governments put in place their proposed changes to zoning laws across Melbourne and Sydney, the council estimates an extra 152,000 homes would be supplied by the end of the decade.
According to the council, a string of problems – if left unaddressed – will leave the government short of its housing targets. They include an inadequate pipeline of skilled workers, “fragmented and costly land suitable for development”, low productivity in the construction sector, restrictive land use and planning laws, relatively high official interest rates and financial distortions caused by the tax system.
It backs the federal government’s increase in social and affordable housing, but argues much more needs to be done.
That includes getting states and councils to improve their planning processes, reducing red tape in the building sector and overhauling the tax system by showing “political courage”.
It recommends reviewing how the tax and housing systems interact, including the politically fraught areas of capital gains tax concessions and negative gearing. It also backs states moving from stamp duty to broad-based land taxes.
The report noted that both renting and paying off a home became harder for median-income households across most Australian capital cities and regions, collapsing to new lows in 2024.
Repayments on new mortgages chewed up about half the earnings of a median-income household, while the same family would have needed to spend a third of their income to meet rental costs for new leases.
Typically, a renter is said to be in rental stress if more than 30 per cent of their income is spent on rent. More than half of lower-income renters faced rental stress in 2023, and these renters are more than twice as likely to report lower life satisfaction.
The time needed to save for a home deposit also crept up from 10.1 years in December 2023 to 10.6 years in December 2024 as house price growth outpaced income growth.
Only 14 per cent of new homes sold in 2023-24 were within reach for a median-income household, down from 18 per cent in 2022-23 and the lowest level since 1995.
A combination of elevated interest rates and rising house prices, especially in WA, Queensland and South Australia, reduced home buyers’ ability to service their loans.
While the share of owner-occupier borrowers behind on mortgage repayments remained low, it rose from less than 1 per cent in the final three months of 2023 to 1.1 per cent in the same period in 2024.
Buying a home remained hardest in New South Wales, while regional Queensland took the top spot for most expensive rent.
Canberra had the most affordable rent, but every state and territory except the Northern Territory recorded worsening rental affordability.
The rate of severe rental stress – where renters are spending more than 50 per cent of their income on rent – surged from 17 per cent in 2020 to more than one in five renters in 2023, the highest level in 10 years.
In good news for home buyers, mortgage affordability remained steady or slightly improved in states such as Victoria and Tasmania.
Federal Housing Minister Clare O’Neil noted the council itself had been reformed by the Albanese government after it was abolished by former prime minister Tony Abbott.
She said the government was putting in a range of policies, from the Housing Australia Future Fund to supporting investment in the pre-fabricated home sector, to get more homes built.
“It takes time to turn the tide on a housing crisis a generation in the making, that’s why it’s so important the Labor government keeps building on the foundations laid last term to build more homes and make it easier for first home buyers to buy them,” she said.
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