The latest 2022-23 federal budget outlined an accord between governments, investors and the construction industry known as the National Housing Accord.

This accord provides for one million new homes to be built over a five-year period starting from 2024.

CoreLogic says this target may be difficult to achieve, even though a million homes were built between 2017 and 2022, because conditions have substantially changed – interest rates are higher, and the construction sector is experiencing severe supply side constraints.

And even if the full quota of homes is built, CoreLogic says, it won’t solve the affordability problem because only 5% of these new homes have been allocated to affordable housing and the private sector isn’t incentivised to build that type of housing.

The budget also encouraged investment in housing by institutions like superannuation funds. However, as CoreLogic notes, Australian property generally delivers gross rental yields of about 3%, which is not high enough for most institutional investors.

Other measures mentioned in the budget included:

  • Help to Buy, a shared-equity scheme that will help 10,000 Australians per year enter the market sooner by lowering their upfront purchase price
  • The Regional First Home Buyer Guarantee, which will help 10,000 regional first home buyers per year enter the market sooner by reducing their deposit requirement to just 5%
  • A $10 billion fund to boost social and community housing
  • A further $46.2 million to help defence force members buy their own homes

However, all these solutions are long-term, as CoreLogic notes.

“Part of the spending restraint in this budget means that supply-side housing solutions won’t kick off in 2024. In the near term however, there is not much this budget offers to alleviate high rental housing costs.”

Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.

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