Home Property Australia Chief Executive | Paving a path out of the housing crisis

Chief Executive | Paving a path out of the housing crisis

  • March 29, 2023
  • by Mike Zorbas

Imagine you wanted to build a million Australian homes by 2029. More than 95 per cent of these must be at-market to buy or rent.

You have a plausible plan for 40,000 social and affordable homes. This assumes the Senate passes the worthy Housing Affordability Future Fund and the clever National Housing Supply and Affordability Council, building on the innovation of the sensible NHFIC, soon to be Housing Australia.

The rest. Good luck. You are behind the housing starting line before you begin. Australia, by the Australian Government’s own numbers is 163,400 homes in national deficit over a decade. At least.

The bad news continues. The volume of apartments rising out of the ground in 2024 will be just over one fifth the number that were built in 2018. Detached housing supply is slowing down.

State governments have been hiding behind local politics to ignore industry’s consistent countrywide messages about supply deficits and poor planning outcomes for the past decade.

Why should all but one of 34 councils in Sydney be failing their own housing supply targets when 46 per cent of people know that poor planning is the reason there is not enough affordable housing in their local areas? Why should it take 6-8 years to build apartments in Sydney and Melbourne?

Clearly state and local plannings systems need intergenerational improvement.

WA Premier Mark McGowan is showing the way in Western Australia, and may the Housing Accord be a warm up to more of this, but we also need innovative solutions.

As the Property Council has been patiently saying for the past decade, with better state planning and the right Federal tax treatment build-to-rent, like purpose-built student accommodation, is the silver bullet.

As then Chris Bowen MP warmly endorsed as Shadow Treasurer, this is one of the rare quality housing supply solutions for providing:

  1. Plenty of new housing in line with the Australian government’s one million homes by 2029 housing targets
  2. Counter cyclical construction jobs because the capital is patient
  3. Superior tenure and amenity arrangements for people who rent and
  4. General market benefits as the additional supply exerts downward pressure on the cost of renting.

How do you get there?

  1. Allow managed investment trust distributions that are attributable to investments in build-to-rent housing to be eligible for the 15 per cent withholding tax rate.
  2. Provide an incentivised tax rate of 10 per cent for investors, domestic and international, that choose to incorporate the supply of Affordable Housing dwellings within their build-to-rent projects. Remove the requirement of Affordable Housing dwellings to be managed by a Community Housing Provider.
  3. Remove the irrecoverable GST expense on land and development costs.

No more need for imagination – the Federal budget is in May – This is the way.