This article is from the Australian Property Journal archive
THE Morrison government’s new initiatives to bring in more first home buyers and single parents into the housing market has been broadly welcomed by industry groups, but concerns remain about the role of low stock supply which is pumping up house prices.
Urban Taskforce Australia welcomed the “expansionary” budget but CEO Tom Forrest said extension of the First Home Owners Deposit and First Home Super Saver Scheme, along with record low interest rates, relaxation of APRA controls and the HomeBuilder grant has seen a spike in housing demand which is pushing up values.
“But without a big boost in housing supply, borrowing from super just pumps up the price further.”
“So Treasurer Josh Frydenberg has a conundrum. Stimulate the economy – but risk new home prices going up and a backlash from those locked out of the housing market.”
It said the NSW planning system had “dropped the ball and slowed housing approvals down to a crawl just before COVID – then they failed to use COVID-19 as a chance to catch up”.
“What that means is all the extra funding for home buyers just pumps up the price of the existing stock of housing, ironically making home ownership less affordable.” Forrest said.
Sydney has remained the most expensive city, as median house prices reached new records across the capitals as the speed of the housing market recovery shocked many, and combined with forecasts for ongoing price increases has brought ongoing affordability issues back into the spotlight.
REIA president Adrian Kelly said welcomed the expansion of the government downsizer superannuation contribution.
“Superannuation incentives for Australians aged 60 and over to sell the family home of up to $600,000 for couples and moving to housing that better suits their lifestyles should encourage turnover in a tightly held market.”
He said that while the budget contains measures to assist first home buyers and the housing package is commendable, REIA had hoped that interest rates for first home buyers would be tax deductible and that the deregulation agenda would be clearer, with tax deductions to “be crucial in years to come when interest rates start to rise”.
The Australian Institute of Architects said the budget does not “underpin the type of system-wide reforms that will set us up for greater resilience.”
“On housing, the Institute was disappointed at the relatively minor new investment of $124.7 million in boosting social and affordable supply.”
“A stably housed, healthy and educated population is foundational to creating a productive workforce in the economy of any developed nation.
“New measures such as the Family Guarantee and extension of the First Home Loan Deposit Scheme will benefit the few, not the many and fail to address need across the full continuum of the housing spectrum.”
It also raised concerns about a critical workforce shortage as COVID continues to put a handbrake on large temporary visa and migration inflows, and population growth concerns were echoed by Property Council of Australia CEO Ken Morrison, as well as the UDIA.
“The next task was to ensure there was a robust and coherent plan in place to ensure international borders can open as soon as health protocols allow and to work with the states and territories via National Cabinet to ensure that robust new dwelling supply pipelines are in place to support future new housing demand,” UDIA national president, Simon Basheer said.
“A win-win is on offer when you boost housing construction – helping more people into home ownership at the same time as it promotes jobs.” Basheer said.
“That is what the government has done over the past year with the stellar success of HomeBuilder, and now it has committed to extending support for housing construction under the First Home Loan Deposit Scheme,” he added.
“Housing and construction contribute 750,000 direct and indirect jobs to the nation, so it is well placed to keep filling the gap caused by border restrictions and a temporary slowdown in population growth.”
According to budget paper, dwelling investment is forecast to grow by 2.5% in 2020-21 as the large pipeline of work supports construction activity over the next year. HomeBuilder is expected to support some $30 billion of residential construction after than 120,000 grant applications were made, but the boom is unlikely to last.
“Dwelling investment is expected to remain strong, with flat growth in 2021-22, before falling by 1.5% in 2022-23 as the elevated pipeline of work, which reflects some bring-forward in demand for residential construction, winds down,” budget papers said.
Budget assumptions anticipate Australia’s population growth will be limited to just 0.2% over in the next financial year, with a return to normal levels of migration not expected until 2024/25.
Morrison said population growth “is not an optional extra for Australia’s economy. Without it we cannot sustain our economic success over the long term”.
Denita Wawn, CEO of Master Builders Australia said the budget “will boost the confidence of the industry that the recovery can continue to largely ride on the ute’s back.”
“Home ownership is the key to economic security and vital for a strong economy. The Family Home Guarantee will be life changing for single custodial parents, the vast majority of whom are women,” she added.
HIA managing director, Graham Wolfe said the announcement of a further 10,000 new places under the New Home Guarantee, introduced in last October’s budget, is an important step, and along with the First Home Loan Deposit Scheme had proven its value in assisting Australians to buy their first home sooner.
He noted research in 2019 found that 92% of renters aspire to own their own home, yet just 49% of renters felt they would achieve home ownership, adding that changes to the First Home Super Saver account would provide “greater incentive and motivation for tens of thousands of young, aspirational Australians to save a deposit for their first home through a tax effective scheme.
Australian Constructors Association CEO Jon Davies said the government’s “commitment to infrastructure brings with it an opportunity for major productivity improvements that all Australians will benefit from”.
