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RESIDENTIAL PROPERTY

Labor unveils $6.6bn plan to deliver 250k homes

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OPPOSITION leader Bill Shorten has put housing affordability on the election agenda by unveiling a $6.6 billion plan to build 250,000 new units and houses.

Speaking at the National Conference, Shorten said, “Too many hard-working Australians are locked out of the housing market or they can’t afford to live anywhere near where they work.”

Under the proposal, the government will offer subsidies to investors who build new houses of up to $8,500 per year, as long as they keep the rent 20% below market rate.

The Labor leader said a family paying the national rental average of $462 a week could save $92 a week.

He added that the 10-year plan will provide support to build 250,000 new affordable dwellings as well as create construction jobs. He estimated that 20,000 of these new units and houses will be built within the first term of a Shorten government.

Labor’s proposal is deva ju for the property industry as it is similar to the Rudd government’s National Rental Affordability Scheme (NRAS), which was shelved by the Abbott government.

The $620 million NRAS built 37,000 affordable dwellings over a decade, which was significantly below the target of 50,000 homes within four years.

The plan was welcomed by the Property Council. Chief executive Ken Morrison said while there is much media focus and commentary on the cooling of housing markets in Melbourne and Sydney, housing affordability remains a critical issue for many Australians whether they are looking to rent or buy a home.

“Labor’s incentives for investors to deliver affordable housing will make a contribution to meeting that need while also providing a boost to our construction industry which is a key driver of economic activity,” Morrison said.

However, Morrison said that sustainable improvements to housing affordability over the longer term required a suite of measures involving federal, state and territory and local governments.

“Planning schemes, land supply, and property taxes which make up around 25% of the cost of a new house are all part of the housing affordability mix – there is no single ‘silver bullet’ solution.

“Labor’s support for more affordable housing must be considered against the backdrop of significant, unmodeled changes to negative gearing and capital gains tax which could have an immediate impact on 2.1 million property investors across Australia,” he added.

Morrison also said Labor should also focus on housing affordability through support for the development of the Build-to-Rent asset class in Australia.

“By enabling international investors to access the withholding tax concessions available through managed investment trusts, Build-to-Rent has the potential to deliver more housing to the market more quickly and more efficiently, including affordable housing choices,” Morrison said.

Community Sector Banking CEO Andrew Cairns also welcomed the $6.6 billion plan.

“The majority of very low income households in Australia are under rental stress meaning they are spending more than 30% of their income on rent.

“Providing more affordable homes from people on low and moderate incomes is a welcome step in the right direction however 20,000 new units and houses over the next four years would only go some way to addressing the huge shortfall.

“The latest Rental Affordability Index revealed that single parents are one of the worst impacted groups by rental unaffordability and many forgo basics like food to keep a roof over their family. To truly put an end to this crisis, we need a plan which provides many more safe, affordable and secure homes for those most in need.” Cairns said.

Australian Property Journal