This article is from the Australian Property Journal archive
THE Albanese government has finally recognised the importance of a “holistic, cross-portfolio approach” to solving the housing crisis, says to a major industry body, but analysts are critical that funding for construction capacity doesn’t go far enough as the government embarks on ambitious housing supply initiatives.
This week’s budget included a $91 million investment to increase the building and construction workforce numbers. The government’s National Housing Accord will aim to tackle the national housing crisis by boosting supply with 1.2 million new “well-located homes” delivered over five years from 1st July, but target is considered farfetched by analysts amid severe labour shortages, as well as current low approval rates and planning red tape.
“The federal budget has finally recognised the importance of a holistic, cross-portfolio approach to solving the housing crisis and made some inroads but has fallen short of supporting the businesses required to deliver on those projects,” said Master Builders Australia CEO Denita Wawn.
“To ensure the industry can build the 1.2 million new homes under the Housing Accord, government ministers must sing from the same hymn sheet and focus all efforts on boosting housing supply.
“Building enough homes for Australians requires action beyond the housing portfolio and needs skills, migration, infrastructure, industrial relations, defence, social services, and industry portfolios to pull in the same direction.
CoreLogic head of Australian research, Eliza Owen, said quicker way for the government to boost construction capacity could be to focus more on already qualified migrant labour.
“Reduced levies for businesses to take on overseas migrant workers, and streamlining skills recognition are important structural reforms that need to be made across a range of sectors, but especially construction at the moment.”
She said the budget’s $91 million allocation could add to labour supply to the tune of 22,000 workers, representing 1.7% growth in an industry where employment had an average quarterly increase of 0.7% over the past decade.
“But it is not clear when the additional workers would be added, with those just embarking on the start of training certificates and apprenticeships potentially taking years to become fully qualified.”
CBRE Pacific head of research, Sameer Chopra said there is “minimal” support for construction cost relief, and “so I remain bearish on the medium-term supply outlook”.
Wawn said the domestic workforce cannot keep up with demand in the short-term.
“Skilled migration represents a vital piece of the puzzle.
“The investment into prioritising and streamlining skills assessments in construction for potential migrants and those already in the country is a great start.
“For many migrants, it is simply too hard to have their professional capacity recognised to work in a trade in Australia, and they are instead in roles that present fewer hurdles to obtain.”
The Parkinson Migration Review found skills assessments or qualification recognition can take up to 18 months and cost nearly $10,000; which Wawn said is “time and money people simply don’t have in this economic climate”.
“We would have liked to see more financial support for migrants in Australia to be able to have their skills qualifications recognised or undertake the necessary gaps training to meet Australian standards,” she said.
The Urban Development Institute of Australia’s national president, Col Dutton said for the government to reach its “ambitious” National Housing Accord target, 97% of its target will be delivered by private housing providers.
“They will need the support from all governments, if they are to significantly increase their delivery capacity, as they struggle to return to their pre-COVID productivity.
“Market-wide solutions will be necessary to tackle a range of fundamental problems, particularly at a time when completions are in freefall. These include chronic lack of development ready land, significant shortage of skilled workers in the construction industry, accelerated cost of construction materials and inhibited project finance, all of which are holding back projects.”
Investors’ taxes a sticking point
Tax breaks for investors and their role in supply levels were a sticking point in the budget wash-up.
Everybody’s Home spokesperson Maiy Azize the government has delivered a budget that will “keep pushing up housing costs for Australians who are already battling a brutal housing market”.
“Any budget that seriously tackles the housing crisis would also stop using unfair tax handouts to prop up landlords and investors, pushing up the cost of housing for everyone else.
“Australia’s housing crisis has never been worse. Fixing it will mean spending real money to build social housing for more renters, and putting people who need homes ahead of investors.”
Greens Housing and Homelessness Spokesperson Max Chandler-Mather posted on X, “Property investors, developers and the banks will be celebrating Labor’s housing budget tonight that dishes out $175 billion in tax handouts for property investors. But for renters, mortgage holders and first home buyers it is a massive kick in the teeth.”
Max Chandler-Mather
Real Estate Buyers Agents Association of Australia president Melinda Jennison said the Labor government had “again refused to accept the fundamental role that property investors have long played in the provision of rental housing in this country”.
“Again, we have been presented with a variety of measures to supposedly boost housing supply at a time when building approvals and completions are at decade-lows,” Ms Jennison.
“For decades, property investors shouldered the burden of providing rental supply for successive governments. However, it’s evident that this is no longer the situation. The rental crisis is the end result of this changing dynamic.
“The volume of investors currently active in the market is well below where it needs to be to significantly improve rental supply, but the federal government still won’t do anything to encourage more investors into the market.
“It’s surprising that the budget has provided incentives to foreign investors to purchase established build-to-rent developments, but no incentives have been offered to the hundreds of thousands of resident investors who provide homes for millions of renters throughout our country.”
According to the Australian Bureau of Statistics lending indicators for March, the number of new loan commitments for investors has dropped nearly 22% ent in the past two years.
A redesign of capital gains tax has been put forward by Westpac chief economist Luci Ellis, suggesting it could be constantly discounted by the long-term inflation target to reduce market distortion.
