Labor unveils affordable housing push in budget 2022–23

The budget — which Treasurer Jim Chalmers MP had foreshadowed would provide “cost‑of‑living relief in a responsible way but not a reckless way” given rising inflation (projected to rise to peak at 7.75 per cent later this year, before moderating to 3.5 per cent in 2023–24) — aims to reduce the deficit and curb spending. 

Released on Tuesday evening (25 October), the 2022–23 October budget focuses the bulk of government spending on health, education, aged care, and defence. 

It also covers sustainability and looks to track and measure wellness for the first time, too.

Mr Chalmers said the $7.5 billion package was a five-point plan for cost-of-living relief:

1. Cheaper child care
2. Expanding Paid Parental Leave
3. Cheaper medicines
4. More affordable housing
5. And getting wages moving again

The Treasurer said it would help “put some money back in people’s pockets, boosts productivity, and grows the economy — but it’s carefully targeted and carefully timed, so that it avoids placing additional pressure on inflation”.

Building a million homes

Among the measures relevant to the mortgage industry are a range of investments relating to affordable housing.

This includes the $10 billion Housing Australia Future Fund (to be managed by the Future Fund Management Agency) to build 30,000 social and affordable homes over five years. 

The fund will provide 20,000 new social housing dwellings, 4,000 of which will be allocated to women and children impacted by family and domestic violence and older women at risk of homelessness. It will also provide 10,000 new affordable housing dwellings, including for frontline workers.

The Treasurer has said that a “high priority” for the government was bringing online “more affordable housing closer to where the jobs and opportunities are”.

It comes as the country faces high property prices and a dearth of rental properties, pushing rents higher and adding strain to household budgets.

As such, a National Housing Accord — which has been developed following months of consultation with state governments, the building industry, and members of the superannuation industry and institutional investors — forms part of Labor’s plan to help build a million “new, well-located homes” over the next five years.

The budget earmarks an additional $350 million in funding under the accord, which will help incentivise superannuation funds and other institutional investors to make investments in social and affordable housing. This aims to help deliver another 10,000 affordable homes over five years from mid-2024 “as capacity constraints are expected to ease”.

The new builds will need to have an energy efficiency rating of seven stars or greater (or a state or territory’s minimum standard). 

This will be delivered through an ongoing funding stream to help cover the gap between market rents and subsidised rents — making more projects commercially viable.

There will be ongoing availability payments over the longer term, to deliver an additional 10,000 affordable dwellings.

States and territories will also support up to an additional 10,000 affordable homes, increasing the dwellings that can be delivered under the accord to 20,000.

“The combination of a more secure pipeline of supply and government support through innovative financing will facilitate cost-effective superannuation and institutional investment in affordable housing,” the budget documents read.

It is expected that the Treasurer’s new investor roundtable (set to meet next month) will help push this agenda forward.

State and territory governments will also help expedite approvals for social and affordable housing when it comes to zoning, planning and land release, for example.

‘The great Australian dream of home ownership seems completely out of reach’: Jim Chalmers MP

Prior to releasing the budget on Tuesday evening (25 October), the Treasurer told journalists that he did not believe anybody in Australia “thinks the housing market is working as it should”, particularly emphasising that it was getting harder for people to afford homes near major centres (where the highest concentration of job opportunities tend to be).

Delivering his first budget speech on Tuesday evening (25 October), Mr Chalmers therefore said the budget aims to “confront Australia’s housing problem”.

“Rents are through the roof, and many families are struggling to keep up,” Mr Chalmers said. 

“Supply hasn’t kept up with demand, which means too many struggle to live close to where they work.

“Too many are stuck on waiting lists for social housing.

“And for too many, the great Australian dream of home ownership seems completely out of reach.”

However, Mr Chalmers said that “most of this supply needs to come from the market, not the government”. He added that the government would “play a leading role" by coordinating and kick-starting investment. 

“We don’t pretend that this Accord solves every issue, nor do we pretend we can solve this problem overnight,” the Treasurer said.

“But this is a serious start — a serious agenda that will lead to more Australians knowing the security of a good job and decent housing.”

The government will broaden the remit of the National Housing Infrastructure Facility to directly support new social and affordable housing in addition to financing critical housing infrastructure.

Home Guarantee schemes and Help to Buy

While the Labor Party is seeking to address cost-of-living expenses through “productivity” measures (such as delivering cheaper childcare and providing longer paid parental leave to better support working parents) rather than providing additional grants or subsidies, there are still some grants available for housing.

These include the continuation of the Coalition government’s First Home Guarantee, Family Home Guarantee, and Labor’s new Regional First Home Buyer Guarantee that will support 10,000 new home owners each year to 30 June 2026.

The budget also sets aside money for its new Help to Buy Scheme (set to commence from July 2023).

The government will spend $324.6 million over four years from 2022–23 to establish the Help to Buy scheme to assist people on low to moderate incomes to purchase a new or existing home with an equity contribution from the government.

The shared equity scheme (first pitched during the ALP’s election campaign) involves an equity contribution from the federal government of up to a maximum of 40 per cent of the purchase price of a new home (and up to a maximum of 30 per cent of the purchase price for an existing home).

Buyers would only need to have a deposit of at least 2 per cent and they will not need to pay lenders mortgage insurance (LMI). There will be 10,000 places each financial year.

Mr Chalmers noted that this will therefore allow up to 40,000 eligible Australians to own their own home “with a lower deposit and smaller mortgage”.

The program will be open to Australians with a taxable income of up to $90,000 per annum, or for couples with a combined income of $120,000, who currently don’t own or have an interest in a residential property. It is not only open to first home buyers.

A Defence Home Ownership Assistance Scheme

The government is also committing $46.2 million to assist current and former Australian Defence Force members to purchase their own home through the Defence Home Ownership Assistance Scheme.

This will support veterans and Australian Defence Force members to purchase a home through monthly subsidies on mortgage interest payments.

The expansion will reduce the minimum service periods for subsidised mortgage interest payments and remove the current post-separation time frame to allow veterans to access the scheme any time after they leave the ADF.

Reducing downsizer age

More older Australians will also be encouraged to downsize their homes, freeing up housing stock for younger families.

The Australian government is extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. This will give pensioners more time to purchase, build or renovate a new home before their pension is affected. In addition, the Australian government is expanding access to downsizer superannuation contributions for people aged 55–59. 

“The downsizer contribution allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home,” the budget document read.

“Both members of a couple can contribute and contributions do not count towards non-concessional contribution caps.

“This measure provides greater flexibility to contribute to superannuation and aims to encourage older Australians to downsize sooner to a home that better suits their needs, thereby increasing the availability of suitable housing for Australian families.”

Planning for the future of Australia’s housing

The Treasury also unpacked plans to develop a National Housing and Homelessness Plan, which will be developed in “close consultation with the states and territories”.

The plan will seek to set out key reforms needed to “make it easier to buy a home or rent and to put a roof over the heads of more homeless Australians”.

The government is also providing $15.2 million to establish a National Housing Supply and Affordability Council to independently advise the government on housing policy.

It will be responsible for delivering advice on options to improve housing supply and affordability, reporting on key issues in housing policy, and promoting the regular collection and publication of data on housing supply, demand and affordability.

The council will also regularly review and advise on the national housing supply target and advise on the development of the National Housing and Homelessness Plan.

[Related: Labor to tighten spending amid whopping deficit]