New ‘housing accord’ announced in budget as government aims to get a million new affordable homes built

The federal budget includes a brand new housing scheme, and the government hopes it will start to transform Australia’s expensive property market.

The federal government has announced a new “housing accord”, which aims to address Australia’s housing affordability crisis by dramatically accelerating the construction of new homes across the country.

The accord, which was one of the centrepiece announcements in Tuesday night’s federal budget, sets an “initial, aspirational” target of getting a million affordable and “well-located” homes built over a five-year period, starting in 2024.

Most of the money is supposed to come from the private sector, with governments at state, federal and local level making it easier for investors by expediting their zoning, planning and land release processes.

“I am proud to announce that we have just struck a new housing accord between governments, investors and industry to build the affordable homes our country desperately needs,” Treasurer Jim Chalmers said in his speech to parliament on Tuesday night.

“The ambition of this accord is big and it’s bold – an aspiration to build one million new, well-located homes over five years from 2024.

“Most of this supply needs to come from the market, not the government. But there’s a role for government, and we intend to play a leading role by co-ordinating and kickstarting the investment we know needs to happen.”

The Treasurer says the accord is ‘a serious start’ when it comes to addressing Australia’s housing affordability crisis. Picture: John Gass/NCA NewsWire

This “kickstarting” comes in the form of $350 million from the federal government, which Dr Chalmers expects to fund 10,000 new, affordable homes.

He said state and territory governments would fund “up to” 10,000 homes as well.

“This will be delivered through an ongoing funding stream to help cover the gap between market rents and subsidised rents, making more projects commercially viable,” he said of the federal government’s contribution.

“State and territory governments will build on our commitment with up to 10,000 new homes as well. That’s up to 20,000 new affordable homes in total.

“Along with local governments, they will tackle supply problems caused by land release and zoning policies.

“Institutional investors, including superannuation funds, have endorsed the accord and will work with us to leverage more investment that delivers for their investors’ and members’ interests, and for the national interest.

“We don’t pretend that this accord solves every issue, nor do we pretend we can solve this problem overnight. But this is a serious start – a serious agenda that will lead to more Australians knowing the security of a good job and decent housing.”

Private investors are expected to fund the vast majority of homes to reach the “aspirational” target of a million. Picture: Gaye Gerard/NCA NewsWire

The median house price in Sydney and Melbourne is above $900,000, a sum well beyond many families’ reach. On top of that, rising interest rates are pushing up the cost of mortgage repayments.

A wide range of policies have been proposed and implemented in recent years in attempts to make homes more affordable, most of them focused on demand – subsidies, guarantees, and other schemes designed to raise people’s buying power.

One example is Labor’s Help to Buy scheme, announced before the federal election in May, which involves the government taking equity in people’s homes, enabling first homebuyers to enter the property market with a lower deposit and mortgage than usual.

The previous Coalition government had policies which allowed eligible Australians to buy homes with deposits as low as 5 or even 2 per cent, as opposed to the usual 20 per cent.

Experts have increasingly warned that the other side of the equation, housing supply, was being neglected.

“Supply hasn’t kept up with demand, which means too many struggle to live close to where they work,” Dr Chalmers said in his speech.

“Too many are stuck on waiting lists for social housing. And for too many, the great Australian dream of home ownership seems completely out of reach.”

Earlier this month, the Productivity Commission warned Australia had a “housing affordability problem” and recommended that governments set new targets for housing supply. This newly announced “accord” falls under that category.

The accord is an attempt to address supply in the property market. Picture: Ian Currie

“Under the accord, state and territory governments will undertake expedited zoning, planning and land release to deliver on a joint commitment to improve the availability of social and affordable housing in well-located areas, including looking for immediate opportunities to free up well-located state land,” budget documents say.

“The Australian Local Government Association will work with state and territory local government associations to advocate for a commitment from Australia’s councils to support the delivery of social and affordable housing.”

The government says Australia’s superannuation system is “hungry for investments that will deliver stable returns over the long-term”, and by “delivering an ongoing funding stream to help cover the gap between market rents and subsidised rents”, it will be making more projects commercially viable.

Theoretically, this will attract more capital from investors.
“Investors have committed to build on constructive discussions to date, and develop workable financing approaches that will best leverage institutional capital to deliver more social and affordable housing.”

The new accord complements the Housing Australia Future Fund, a $10 billion election commitment, which is the government’s effort to provide “a sustainable funding source” to increase housing supply.

The Albanese Government is also spending $15 million to establish a National Housing Supply and Affordability Council to advise it on housing policy.