Supply is King.
We need a greater supply of better zoned and planned land for housing across our cities. Brownfields and greenfields.
A 79,300 housing supply deficit over the decade to 2032 is the latest, conservative, national government estimate. Hat tip to the National Housing Finance & Investment Corporation (NHFIC).
We need housing land supply to be a Premiers’ and First Ministers’ strategic priority. Proper national settlement plans, including sustainability and insurance overlays, would help too.
State housing targets and planning reforms are essential. Only Premiers McGowan, and to a lesser degree, Malinauskas, seem serious about progress in these areas.
We also need more social housing. Housing supply doesn’t work to support opportunity and social inclusion without housing choice and housing diversity.
Housing demand, housing need, is diverse. People might be in the market for homes to buy or to rent, at-market, key-worker (discount to market) or social housing. They might be part of a large family or be single and they may be motivated by current or future economic, social, health or educational drivers, or all of the above.
That is why we need a national focus on boosting the diversity of housing stock and choice in our cities.
One of the jewels in the policy crown is government encouragement of more compact and well-located built form. This will help more people meet their needs at different life stages. It will also put downward pressure on the cost of buying and renting in the broader market.
People may need to be better located to study or jobs or aggregated government services or leisure amenities. Think students in purpose-built-student accommodation and people living in retirement communities.Â
Whether it is in print, on radio or the evening news, boosting supply and promoting living communities is a national conversation the Property Council has been patiently contributing our thought leadership to these past few months.
In commissioning EY’s recent, compelling research on build-to-rent (BTR) housing we sought to demonstrate the size of the prize. The work done by Luke Mackintosh and his team indicates customer led BTR communities could be supplying up to 150,000 homes over the next ten years if the policy settings are right.
This is our chance to bridge the housing deficit through Australian Government action to level the investment playing field for a nation in ever shorter supply of homes.
Policy improvements that we have long championed in this area include:
- Allow managed investment trust distributions that are attributable to investments in BTR housing to be eligible for the 15 per cent withholding tax rate like investments in commercial property
- Provide an incentivised withholding tax rate of 10 per cent for investors, domestic and international, that choose to incorporate the supply of Affordable Housing dwellings within their BTR projects.
There are other policy solves in the EY report but these are the essential national measures. They are the encouragement that overseas and domestic capital needs to help us create liquid markets that will lead to decent supply. Undoubtedly the majority of these homes will be at a higher price point to begin with.
One natural query is, won’t there soon be a significant BTR housing market relieving demand pressure without any new policy work? Reading the BTR pipeline announcements in The Australian and the Financial Review over the past few years you might be forgiven for thinking that the billions committed to BTR add up to a viable, self-sustaining BTR market in the mould of the United States market.
The numbers show otherwise. EY’s analysis demonstrates that our current BTR pipeline, even with those billions committed, is 0.2 per cent of our $9-10 trillion national housing stock. Compare that to the United States – where smart policies mean that ‘multi-family’ is 12 per cent of the residential market.
And so smarter BTR policies are needed. These should put us on the same footing as new housing investment in the US and UK housing markets.
Without BTR policy changes and absent capital city planning reforms, the Australian Government will never meet Treasurer Chalmer’s bold ambition of one million new ‘well located’ homes in the years 2024-2029.
It is sobering news that you may hear from us first. Rest assured; you will hear it from us often.