Budget tackles the fundamentals of housing affordability

The 2017-18 Federal Budget has lived up to the hype of being a Budget that makes substantial progress on tackling housing affordability.

“The Budget is a serious attempt at tackling Australia’s housing affordability problems”, said Ken Morrison, Chief Executive of the Property Council of Australia.

“The Budget offers substantive policy solutions to many of the challenges facing home buyers and renters on low incomes.

“The focus on improving housing supply, keeping rental growth low and closing the deposit gap are all welcome, but the initiatives targeting foreigners will damage Australia’s reputation and will do nothing to help housing affordability.

“We have consistently said that you can’t change the trajectory of house prices in our cities without making progress on housing supply – and that means tackling blockages and providing non-distortionary incentives to invest in new supply.

“This Budget has a good mix of initiatives to unleash significant new housing supply in our cities, although implementation will take a lot of work.

“Central to removing these blockages is a new National Affordable Housing Agreement and the use of City Deals to ensure that we deliver real progress on new housing supply. These measures will bring state and local governments to the table using financial incentives to drive new housing supply. It is right that future City Deals include housing supply targets.

“The Budget is not just about home buyers, it also provides significant incentives for new investment in affordable rental accommodation. We want to work with the government and non-government sectors to ensure these measures work.

“Addressing the deposit gap for first home buyers is a critical part of addressing our housing challenge. Our fear was that a scheme that used superannuation would be inflationary. However, the architecture of the First Home Super Scheme appears to be a non-inflationary measure that will help hundreds of thousands of Australians save for a deposit for their first home.

“Our only disappointment with the Budget is that the Government has announced a range of measures aimed at punishing foreign investors. These seem designed to provide the government with a few good headlines but these measures will do nothing to improve housing affordability and potentially send a message about Australia’s openness to investment.

“Getting our cities working better is also fundamental to the productivity of our cities. That is why the decision of the Commonwealth to back-in metro rail lines in our cities is the right one, but we note that most of the promised $10 billion funding falls outside of the forward estimates.”