What is the Federal Government proposing to do about Housing Affordability?

What is the Federal Government proposing to do about Housing Affordability?

It may feel like a very daunting market out there if you are a first home buyer but you are not alone.. The government wrote in their October 2022-23 budget, “Home ownership has become increasingly difficult for Australians to achieve, as housing prices have outpaced incomes.”

Rents are sky-high, vacancy is low, and the housing market is volatile due to a shortage of materials. While it feels like a bad time to purchase your first home, the market isn’t necessarily weak, and houses are still likely to outpace inflation and long-term savings. If you manage to find a house within your price limit, then it’s still a worthwhile endeavour.

The New Housing Accord

To address the need for new, affordable housing in the country, the federal government has announced a “Housing Accord”, involving all levels of government in association with superannuation fund management, other investors, building councils, and members in the construction industry. Federal Treasurer Jim Chalmers said, “Our shared ambition is to build one million new well-located homes over five years from 2024.” The Federal Government has also released a document that explores their plan to build up the housing economy over five years, which you can find here.

While there are still some questions regarding the affordability of the houses, where the funds are expected to be sourced from and the environmental impact of the new houses, , it does look like good news for first-time home buyers.

With new houses built anywhere in the country, at any price point, comes a wider market, higher supply, and less volatility for your house hunting. So, what exactly is the new Housing Accord seeking to do?

The plan, is to build one million new homes by the end of 2029. This will be significantly higher than the rate at which houses are typically built in Australia, especially considering the recent decline in building commencement.

Investments in the property market

There is a gap in the property market where the federal government sees the superannuation system taking a more significant role. They say, “Australia’s superannuation system is hungry for investments that will deliver stable returns over the long term for the benefit of its members.” Where our superannuation contributions are invested into various sectors of our national industries, and often internationally too, that investment may be retargeted towards housing affordability, potentially benefitting home buyers.

Government housing policy

In addition to the stated goals of the Housing Accord, the federal government is looking into several elements of housing policy, with the expectation easing the pressure we’re currently experiencing.

They’re investigating the following:

The National Housing and Homelessness Plan, to house the homeless and inform the government on better affordability policy.

Establishing a ten-billion-dollar Housing Australia Future Fund sourced from lower levels of government and private investors. The fund will build more affordable housing and more social housing for women and children impacted by domestic violence.

Providing programs to assist first-time home buyers into home ownership. Programs such as ‘Help to Buy’ and the ‘Regional First Home Buyer Guarantee’. These programs are aimed at helping Australians get into new homes with smaller deposits and smaller mortgages.

There are more listed initiatives in their budget factsheet, which you can read here.

So, as a first-time home buyer, what does this mean for me?

Things are looking up in the future. Purchasing your own home is still an excellent investment if you can ride the waves through the currently choppy waters. And if you’re currently dealing with setbacks, things should be a little easier down the track.

If you need advice or help to find a home loan, talk to an expert that keeps up with the latest developments in the housing market.