What does the real estate sector really think of Labor’s latest budget?

On the evening of Tuesday, 25 October, Mr Chalmers announced, amongst other initiatives, the introduction of a National Housing Accord between governments, investors, and industry with a sole aim — to build 1 million new homes over five years, beginning in 2024. 

Casting a critical eye on the Albanese government’s accord targets, Angus Raine, executive chairman at Raine & Horne, explained that the target “seems a tall order given we have a shortage of tradies in Australia and building materials”. 

He believes “the increase in the number of permanent migration visas available in 2022–23 from 160,000 to 195,000 places might address some of the labour resources needed to build 1 million new homes”.

He commended the government’s movements to deliver more social and affordable housing but did add that more could be done to further incentive downsizing. 

“I have also urged state and territory governments to consider stamp duty exemptions for older Australians aged 60 or over. This tax obstructs the plans of empty nesters as it eats away at their retirement nest eggs,” Mr Raine said.

“By encouraging empty-nesters to move into more age-appropriate housing, we can address some long-term supply issues and create more housing options for expanding families.”

Mr Raine also outlined how more could be done to “unlock the vast store of wealth held by empty nesters, with all home owners over 60 exempted from any curbs to downsizing, whether it’s the asset test or the need to pay property taxes”. 

Building on Mr Raine’s comments, Thomas McGlynn, chief executive officer at BresicWhitney, said: “The federal government has made its long-term intentions clear — to work with, and for, the industry in pursuit of a more stable and accessible market for all participants.”

He added, “whilst the budget measures, unfortunately, will not have an immediate impact on the very real and complex pressures facing both would-be and current home owners, it is, of course, a positive to see the industry’s challenges addressed as a priority.

“Above all else, this budget affirms the critical role of the industry in the economy. It is more important than ever for all participants — private and public — to work towards the common goal of stabilising and normalising the market for the long term.”

Similarly, head of research and head of intelligence at LJ Hooker, Matthew Tiller, believes “no single measure contained in this year’s budget is expected to have a direct or substantial effect on property markets over the remainder of the 2023 financial year”.

“That said, the announcements of a new National Housing Accord between federal, state, and local governments as well as institutional investors and the construction industry will help boost housing supply [and] will have a positive impact in delivering additional social and affordable housing over the medium to long term,” Mr Tiller said. 

As reported on Friday (28 October) on REB, CoreLogic’s head of Australian research Eliza Owen contextualised the government’s ambitious housing target, stating that while it is ambitious given current economic circumstances, the reality is “the target is not ambitious given [that] recent completions match this anyway”. 

“ABS dwelling completions data suggests that 974,732 homes were constructed in the five years to June 2022, and an average of 1,010,723 have been completed on a five-year basis since 2017,” Ms Owen said. 

She did caveat that “the past five years have been conducive to high levels of construction, and there’s no guarantee activity levels will remain at the same level for the next five years”.

Her greatest worry related to the accord is related to what portion of the 1 million homes will be allocated to affordable housing as “at the moment, it seems at least 5 per cent will be allocated to affordable housing”.

Ms Owen also explained that the first Labor budget since 2013 is also laying the platform for institutional ownership of land and property, which she said, “could be an awkward fit for Australia”, especially given national tax settings are more favourable to individual, “mum and dad” investors. 

“While there is not a lot of detail just yet about how institutional investors will fit into the Australian housing market, it seems the Albanese government is laying the foundations for a new kind of property ownership in Australia,” she said.

Touching on how “these existing policies are likely to have mixed effectiveness in boosting housing”, Ms Owen confirmed that the government has taken “a step in the right direction for easing price pressures in housing longer term”. 

She maintained that “a worthwhile addition to the policy mix might lie in adjusting rent assistance for low-income households, to help with housing stability while new housing is built”. 

Ms Owen concluded that “in the near term, however, there is not much this budget offers to alleviate high rental housing costs. Instead, we are likely to see a more demand-driven shift in the rental market, with the potential for share houses to re-form, or migration away from excessively tight rental markets.”

To hear more on the federal budget, tune in to the latest episode of REB’s Secret of the Top 100 Agents podcast here.