$2 billion social housing package welcomed

Effect on brokers, property values assessed

$2 billion social housing package welcomed

The federal government’s commitment to invest $2 billion into increasing supply of social homes across Australia is positive for Australia, and provides a future pathway into home ownership, industry representatives say.

Announced by Prime Minister Anthony Albanese on June 17, the Social Housing Accelerator program promises to deliver thousands of new social homes across Australia.

Given the number of new social homes to be built (estimates put this at 9,000) and lead times, CoreLogic doesn’t expect the program to influence overall demand for property and property values.

The payment would be delivered to state and territory governments within two weeks, creating thousands of homes for Australians on social housing waiting lists and increase housing supply sooner, according to the Albanese government. 

NSW is to receive $610 million towards increasing social housing stock, while Victoria will receive $496m, Queensland $398m, Western Australia $209m, and South Australia will get $135m. Tasmania, the ACT and Northern Territory are each to receive $50m.

The government has specified that all funding is to be committed by states and territories within two years, ending June 30, 2025.

The announcement comes as the government’s Housing Australian Future Fund bill, which will set aside $10bn for social and affordable housing, was defeated in the Senate, with the Greens and the Coalition combining to reject the legislation. It leaves open the possibility of a double dissolution election.

Positive spillover for mortgage brokers

AFG CEO David Bailey (pictured above left) said that the $2bn in funding was a “welcome investment” to assist in resolving undersupply of social housing.

States and territories must work together to resolve the issue and it’s pleasing to see collaboration underway, he said.

“Actions taken by governments of all levels to support some of the most vulnerable in our community is a step in the right direction,” Bailey said.

In response to whether he anticipated any impacts of the Social Housing Accelerator on mortgage brokers, Bailey said that a secure home could “provide the foundation” for people to establish a way forward.

“That way may one day lead to homeownership in their own right and the support of a mortgage broker would help them open that door,“ Bailey said.

As federal funds could be used for new builds, expanding existing programs and for renovating or refurbishing existing but uninhabitable homes, Bailey said that certain industries were likely to be impacted.

“That will likely put pressure on construction supplies and trades, which we know are already facing challenges and that may have some flow-on effects for our industry,” Bailey said.

As AFG is a supporter of Foyer Foundation, a national charity that assists homeless youth, Bailey said that he was aware of a national network of community housing providers with investment-ready Youth Foyer projects ready to start.

“We would hope they [these projects] are considered as the various levels of government work through the distribution of these funds,” Bailey said.

Minimal impact on property, rental values, says CoreLogic

CoreLogic economist Kaytlin Ezzy (pictured above centre) said that the Social Housing Accelerator was “welcome news” for Australians experiencing housing stress.

She expects the package to alleviate some of the supply pressure in the social housing sector and to provide more security for families experiencing rental hardship.

“However, given the program’s relatively small size, it’s unlikely to have a significant impact on overall housing supply and market conditions,” Ezzy said.

Commenting on how the government’s package might influence demand for property – and therefore property prices – Ezzy said that no short-term impact was expected on either property values or rental values.

“Although the states will commit these funds within the next two years, the time required for planning and construction will likely see it take longer for these homes to be added to the housing supply,” Ezzy said.

This is especially the case in the current climate, where the rate of delivery in new housing has slowed due to tight labour markets, elevated construction costs, and a surge in construction projects through the HomeBuilder Scheme period, she said.

The National Housing Finance and Investment Corporation (NHFIC) recently updated its predicted housing shortfall by 2027 to 175,000 homes, Ezzy said.  In a State of the Nation’s Housing Report 2022-2023, NHFIC estimated that there were around 377,600 households in housing need, comprised of 331,000 households in rental stress and 46,500 households experiencing homelessness.

In June 2021, the Productivity Commission recorded over 160,000 applicants on waiting lists for public housing and a further number of community and state-owned managed indigenous housing, Ezzy said.

“It's likely any downward pressure generated by the additional 9,000 homes will be offset by increased demand,” she said.

Similar to property values, Ezzy said that the Social Housing Accelerator would have minimal impact on private rents over the coming year. Excess demand from overseas migrants (who typically rent upon arrival) is expected to offset any supply benefits offered by the program, she said.

“Additional social housing will serve to relieve some pressure at the low end of the rental market, but higher volumes would be needed to make a significant change to growth in rents,” Ezzy said.

Social housing investment will pay off for government - AHURI

Australian Housing and Urban Research Institute (AHURI) managing director Michael Fotheringham (pictured above right) said that social housing was a “key piece of social infrastructure” that supported a range of individual goals. 

People housed in social housing often experience improvements in their health, safety and sense of empowerment, he said.

“Social housing provides a safety net to vulnerable Australians. A person living in social housing is far less likely to experience homelessness than one living in an unaffordable private rental dwelling,” Fotheringham said.

While society benefits broadly from public investments into these forms of infrastructure, Fotheringham said that the government had the opportunity to capture savings in areas such as health, justice and welfare services.

“Providing more long-term social housing has the potential to result in significant cost savings to government,” Fotheringham said.

Announcing the Social Housing Accelerator, Albanese said that “every Australian deserves the security of a roof over the head”.

"This is new money, right now, for thousands of new homes and complements our ambitious housing agenda," he said.

With the $2bn in additional funding included, the Albanese government’s investment in housing and homelessness now totals over $9.5bn.

It continues the work of the new National Housing Accord, which aims to build 1 million new homes over five years from 2024.