How the Federal Budget’s Housing Measures Stack Up?

Housing was a major focus of the 2024 federal budget, with a 42-page statement devoted to ‘Meeting Australia’s Housing Challenge.’ So, what are the new policy announcements, and will they help ease the housing crisis?

Easing the Housing Burden for Low-Income Renters: The budget brings good news for low-income renters. A 10% increase in the maximum Commonwealth Rent Assistance payment was announced. This follows a 15% increase last year, adding up to more than $70 a fortnight for nearly one million households. This is welcome relief, especially since typical rents have gone up by around $200 per week since 2020.

The budget also promises more support for affordable housing. The National Housing and Homelessness Agreement gets an extra $200 million a year from both federal and state governments. Plus, $1.9 million in concessional loans will help community housing providers build new social and affordable homes. This should help reduce long wait times for housing services.

Expanding Housing Supply: To lower housing costs, the government is focusing on expanding the housing supply. An extra $1 billion is being added to the Housing Support Program, on top of $500 million already promised. This money will go toward infrastructure needed for new housing, like water, power, sewerage, and roads.

The construction sector also gets a boost with $88.8 million for 20,000 fee-free TAFE places. Additionally, 1,900 skilled visas will be fast-tracked to jump-start housing construction. While these numbers are small compared to the 1.3 million Australians in construction, they should help speed up building new homes.

Three-Pillared Approach to Housing: The government's approach to lowering housing costs has three main pillars:

1. Building More Homes: The goal is to build 1.2 million new homes over the next five years. Funding from the National Cabinet will support this commitment.
    
2. Direct Support to Renters: Increased Commonwealth Rent Assistance payments and other cost-of-living support aim to help vulnerable renters. The Housing Australia Future Fund is expected to provide $500 million a year, supporting the building of 55,000 new social and affordable homes by 2029.
    
3. Helping First-Home Buyers: The Help to Buy scheme would let the government contribute up to 40% of the equity for first-home buyers’ purchases. However, this scheme is currently stalled in parliament. Meanwhile, the Home Guarantee Scheme lets first-home buyers and single parents buy with small deposits without paying Lenders Mortgage Insurance.

More Needs to Be Done

The budget addresses key housing issues, but more is needed. Low-income renters still struggle with high rents, spending more than 30% of their income on housing. Building more homes is the right approach, but current construction rates and approvals suggest we might not meet the target of 1.2 million homes.

The National Housing Accord should be revisited. Federal funding is based on states meeting housing targets, but this isn’t working everywhere. More incentives or penalties could help. Additionally, switching from stamp duty to land tax could unlock more housing capacity and improve productivity.

Given the time it takes to approve and build new housing, quick action is needed to tweak these policies and unlock housing supply to impact housing costs in the coming years.

The housing focus of the 2024 budget builds on previous policies and targets the most pressing issues. By easing the burden for low-income renters and funding more social and affordable housing, the government is helping those most affected by the housing crisis. Building more homes will help reduce housing costs for all Australians in the long run, but more needs to be done.

If you are considering property investment in Australia, it's a good time to look into it. Whether you're a buyer's agent in Sydney or Brisbane, or just someone interested in buying property, understanding these budget measures can help you make informed decisions. Use an investment property calculator and check the latest investment property home loan rates to see how you can benefit from these changes.