Franzen Tips #1162 - National Cabinet Housing Commitments
Franzen Tips #1162:
National Cabinet Housing Commitments
Recently the “National Cabinet” met with one of the key agenda items being the current housing crisis that faces the nation. We have covered the reasons for this crisis in previous tips, but basically the pandemic, along with a few other factors, has created a perfect storm of high housing prices and low rental supply. One of the key outcomes from the meeting was that the state and territory leaders agreed to increase the 1 million new homes (agreed last year) to 1.2 million “well-located homes over five years” with a start date of 1st July 2024.
Fixing such a problem is certainly not easy as the key issue causing the problem is a severe lack of supply. The difficulty for the Federal Government is that the responsibility for “supply” really is the responsibility of state governments and local councils, so what can they do to assist in fixing the problem? The only real option they have is to throw money at it. The Federal Government has:
· Committed $3 billion to a “New Home Bonus” which will go to those states and territories that achieve more than their share of the 1 million home target.
· Provided support through the Housing Support Program, which is a $500 million funding program for local and state governments as a kickstart.
· Initiated new programs to focus on skills and training.
However, questions are being asked about whether these targets are even possible in the timeframe that has been specified. Research from the Urban Taskforce group (as reported in an article in realestatebusiness.com.au) prompted their CEO Tom Forrest to say there is a “huge chasm between current approvals and what is required under the revised National Housing Accord”. Taking NSW as an example, the state needs approximately 90,000 approvals per year or about 7,500 per month. And now for the scary news. Recent ABS data indicates that in July 2023, NSW approved 3,361 new homes. This is less than half the required monthly target which is due to start in July next year. Mr Forrest said “Today’s ABS data shows that the NSW planning system is a very long way from getting close to this. We have 10 months to go before the NSW Housing Accord targets of 76,000 completed homes per year kick in. Every day counts if we are to see these national cabinet targets met.” He went on to say “Now is the time for bold reform with a clear focus on housing supply. It’s time to match the welcome political rhetoric on housing supply and higher targets with action. The numbers don’t lie – we are going backwards, and the industry’s confidence is waning.”
In the same article, the Housing Industry Association managing director Jocelyn Martin echoed the concern by saying: “Skills shortages in the industry are likely to be one of the greatest challenges…… Initiatives to attract more females to the sector, incentives to make mature-age apprentices more affordable, and mentoring programs to retain apprentices are all important to support the need for skills.” She pointed out that a number of other factors such as access to land at a lower cost, reduced taxes and stable and reliable policy settings would impact the building industry’s ability to step up production.
This issue is really going to test governments at all levels, and it will be interesting to see just how “bold” they become to even come close to meeting the targets set.