Did the 2022-23 budget hit the mark for housing?

Introducing the 2022-23 federal budget in Parliament on Tuesday night, 29 March, Treasurer Josh Frydenberg looked to underscore the strength of the Australian economy.

Touting Australia’s road to economic recovery as miles ahead of our counterparts, the latest budget sets out to budge the bottom line of the national balance sheet. According to the Treasurer, the newest spending statement represents the “largest and fastest improvement to the budget bottom line in over 70 years”.

With a federal election looming, household expenses were unsurprisingly one of the big focal points of this year’s budget, with the Morrison government promising tax cuts, cash handouts, cheaper fuel prices, and of particular relevance to real estate – a big push to improve levels of home ownership.

In the midst of one of the biggest market booms in recent times, and with housing affordability long dominating headlines across the country, what does the real estate industry think of the government’s spending plans?

REIA: A ‘reassuring’ statement

Real Estate Institute of Australia (REIA) president Hayden Groves believes the latest budget is, overall, “a reassuring budget 2022 for home ownership and all consumers or aspiring consumers within the property market”.

Conceding that pre-election periods generally don’t bode well for consumer sentiment – especially those looking to list their home for sale or rent, it was Mr Groves’ view that “with a budget that deals directly with inflationary pressures, contains a moderate outlook for interest rates and supports key investment measures like negative gearing retaining bi-partisan support, Australians should move forward with plans to sell and capitalise on the strong market conditions”.

Reiterating it as “a great budget for home ownership”, he did, however, flag that “more needs to be done to set Australia up for future success”.

Welcoming the $2 billion allocation to the National Housing Finance and Investment Corporation, Mr Groves conceded that for the Australian real estate sector to continue to underpin Australia’s prosperity, the future of housing supply needs to be tackled, the president opined.

“One of the major areas governments can address housing affordability is to take a leadership role to unlock supply through national cabinet,” he said.

He considered: “This is obviously something that needs to be tackled in future budget cycles with all three tiers of governments as until this is addressed, the right supply mix within our existing housing stock and new homes affordability is unlikely to improve in the near term.”

The president also argued more needs to be done to improve productivity and real wages, while a sizeable skills package “should underpin the people of real estate and set up our workforce for the future”.

He raised that “the 27 per cent of Australians living in private rentals remain frustrated by our 4,500-property manager shortage – as do Australia’s real estate agencies”.

PCA: ‘Supply crunch’ is coming

The Property Council of Australia (PCA) has warned that the budget offers no real solutions to two big challenges facing Australian real estate and property: impending population growth and a looming housing supply crisis.

While applauding Australia’s path to economic recovery out of the pandemic, PCA chief executive Ken Morrison highlighted it as “clear that the budget results are contingent on a strong bounce back in population growth and there are risks that falling housing supply also becomes a looming drag on the economy”.

With pre-pandemic levels of migration not expected for at least two years, the CEO warned that if targets are not reached as expected, it will be “a drag on the economy and the budget”.

Mr Morrison is therefore urging the government “to pull all stops to achieve a fast return to normal population levels as soon as possible”.

The CEO also raised the extent of the country’s housing supply crisis, with the budget papers having predicted dwelling investment levels will drop significantly, from 5 per cent growth this year, into negative territory (-0.5 per cent) by 2023-24.

“While the HomeBuilder scheme saved jobs and delivered great benefits to households, the record pipeline of work it created will come to an end just as our population begins to recover, which will intensify the supply crunch we know is coming,” he warned.

While noting HomeBuilder and the Home Guarantee as “welcome demand-side measures”, he conceded they “cannot address the supply-side issues”.

“The government’s own forecasts from the National Housing Finance and Investment Corporation (NHFIC) predict that housing supply is set to drop by 35 per cent right at the time population growth would resume, leading to a national deficit of 163,400 homes by 2032,” Mr Morrison flagged.

Knight Frank: ‘A missed opportunity’

Having analysed the budget document, Knight Frank’s chief economist Ben Burston has considered that the budget “is a missed opportunity to review the taxation treatment of the nascent build-to-rent sector to ensure that policy settings do not impede the flow of institutional capital ready to be deployed to help alleviate supply pressures in coming years”.

He also flagged the key concern of a dwindling supply of rental properties while rents are rising as overseas migration returns, while taking the time to applaud the $2 billion boost to the NHFIC.

HIA: ‘The federal government is committed’

Housing Industry Association (HIA) has applauded many of the measures contained within the latest spending statement.

Managing director Graham Wolfe said the expansion of the Home Guarantee Scheme would “support more Australians [to] gain the security that comes with owning their own home”.

According to him, all levels of government have a role to play in restoring the rate of home ownership and the measures announced yesterday demonstrate that the federal government is committed to playing a bigger role.

Turning his attention to the NHFIC, Mr Wolfe also praised the $2 billion injection of the sector, stating that “extending the liability cap of the affordable housing aggregator by a further $2 billion will enable the National Housing Finance and Investment Corporation to continue to build this critical housing”.

Continuing, Mr Wolfe said that “access to funding via NHFIC will enable the community housing sector to make more affordable housing available to those having difficulty accessing the private rental market now and into the future”.

On the topic of apprenticeships, the director has acknowledged the need to incentivise people to start training as making “great sense” – as does “continuing to support employers to take on those wanting to start their career in a trade”.

SCA: ‘Golden opportunity’ missed

The Strata Community Association (SCA) has expressed that the federal budget “missed a golden opportunity” to achieve long-term sustainability and cost of living goals.

SCA president Chris Duggan said that while it was great to see the government set out short-term measures to provide cost of living relief and a step on the ladder for new home owners, he did concede that the budget had missed the opportunity to leverage the strata industry’s untapped potential to turbocharge long-term, meaningful gains towards net zero, sustainability, cost of living and housing affordability issues.

He argued: “The 20 per cent of Australians living in strata buildings such apartments and townhouses are crying out for targeted, specific funding and programs that accelerate their awesome capacity to deliver lower emissions, better waste management, more sustainable living and dwellings that are attractive and affordable to all Australians.”