Labor pledges $2bn towards affordable housing

The additional funds are set to increase the National Housing Finance and Investment Corporation’s (NHFIC) liability cap from $5.5 billion to $7.5 billion from 1 July 2023, which will enable the NHFIC to support more social and affordable rental homes through lower costs and longer-term finance to community housing providers.

Minister for Housing, Julie Collins MP, stated the financing boost will reinforce the Albanese government’s commitment to deliver more affordable housing.

“The Albanese Labor Government was elected with an ambitious housing agenda,” Ms Collins said.

“This boost in the Budget will help get more Australians into affordable rental homes sooner.

“This is action that will have a real impact on people’s lives, and will support our plans to build tens of thousands of additional social and affordable rental homes right across the country.”

In addition, the federal government will be offering incentives in the May budget in order to boost the supply of rental housing by altering arrangements for investments in build-to-rent accommodation.

These changes include increasing the depreciation rate from 2.5 per cent to 4 per cent per year for eligible new build-to-rent projects with construction set to commence after 9 May 2023 as well as reducing the withholding tax rate for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties after 1 July from 30 to 15 per cent.

Housing shortfall 

The NHFIC’s State of the Nation’s Housing 2022–23 research report recently warned that the undersupply of housing is set to worsen as demand outpaces supply.

The report revealed a slowdown in supply is expected to lead to a shortfall of around -106,300 dwellings (cumulative) over the five years to 2027 or -79,300 over the next decade.

According to the report, a  “stronger-than-anticipated” population recovery following borders opening in 2022, along with construction costs and delays and the consecutive interest rate hikes are exacerbating housing affordability and an already tight rental market.

NHFIC chief executive Nathan Dal Bon said at the time Australia’s housing affordability and supply constraints were likely to remain challenging for some time, underscoring the need for a “holistic approach to mitigate the housing pressures Australians are facing”.

“It reminds us that state, territory and local governments simply have to lift their run rates on housing supply across the at market, key worker and social housing spectrum,” he said.

[RELATED: Housing shortfall expected to worsen: NHFIC]