Australian federal budget 2025: five ways the government missed the mark on housing

With a budget spruiking that it is ‘Building Australia’s Future’, you’d expect to see all sorts of things in there to aid construction. Here are five ways that the government missed the mark.

The 2025 budget has showed what the government is and isn’t prioritising when it comes to housing.

With a budget titled ‘Building Australia’s Future’, you’d expect to see all sorts of incentives in there to aid in the construction of much needed property supply. See, ‘building’, or the lack thereof, is the biggest cause of the nation’s current housing crisis.

With a budget titled ‘Building Australia’s Future’, you’d expect to see all sorts of incentives in there to aid in the construction of much needed property supply. See, ‘building’, or the lack thereof, is the biggest cause of the nation’s current housing crisis.

Housing markets are driven by supply and demand. When more people need a home than there are homes available, prices will rise.

In Australia, there has not been enough housing supply for a very long time, so prices have continued to rise even as the RBA hiked interest rates and borrowing power fell.

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Housing accord going backwards

Remember the federal government’s national housing accord? The five-year plan to build 1.2 million new homes? How’s that going?

The budget revealed the accord has seen just 45,000 homes built, but promises this rate “will accelerate as the government’s initiatives take effect”.

The new message here: We’re still doing that thing we’re doing and hopefully it improves.

Unfortunately, Property Council of Australia figures show Australia is currently on track to be 462,000 homes short of that 1.2 million target.

The government’s national housing accord has seen just 45,000 homes built in 1.25 years. Picture: Getty

Not long ago, a Housing Industry Association analysis had us on track to be 224,000 homes short. By the time 2029 rolls around, we may not even get half of that necessary supply.

Meanwhile, net overseas migration has increased by 75,000, so we’re treading water at best. Hope those initiatives take effect soon!

Of course the trouble with federal initiatives regarding construction is that it’s the states and (worryingly) their local councils that have to deliver the end product.

Things might be easier if all your development applications went straight to the PM’s office rather than via a council approval process, but unfortunately that’s not how it works.

Help to Buy is not that helpful

Will Help to Buy actually help you buy? Picture: NCA NewsWire/ Gaye Gerard

The government has committed $800m to expanding its Help to Buy scheme, which allows first-home buyers and single parents to purchase homes with deposits as low as 2 per cent, while the government contributes up to 40 per cent of the cost of a new build and 30 per cent of the cost of an established home.

The additional funding will cover raising the income caps buyers need to be deemed eligible from $120,000 to $160,000 for couples, joint applicants and single parents; and from $90,000 to $100,000 for single buyers without kids.

Governments always seem to be coming up with ideas that create more demand.

Help to Buy will essentially bring more people into the market to fight over fewer properties. It’s like overseeing the world’s most lopsided game of musical chairs and trying to make it fairer by bringing more people into the game, without adding chairs.

The extra competition will mean further price rises. And the government, as investors in these homes, will find itself in the awkward position of pushing prices up, while touting a housing accord designed to bring prices down.

Source: Australian Federal Government.

A $54m investment sounds pre-fabulous

This budget included $54m to ‘modernise’ home building through the wider use of prefabricated and modular homes. The claim was it would cut the time needed to build a home by up to half, by helping states and territories access the technology and streamline approvals.

Halving the time taken to build homes would be helpful, but projects would still need to be approved, worth investing in by developers and backed by lenders.

Currently, the Commonwealth Bank is the only lender of note to announce plans to support loans for prefabricated builds.

Homes being built in a factory are the government’s great hope to help speed up the home building process.

Construction apprentice incentives

The establishment of the Housing Construction Apprenticeship stream will see grants of up to $10,000 for eligible construction apprenticeships from 1 July to encourage more skilled workers into the home building sector. An additional $5000 will go to employers with apprentices in ‘priority’ occupations. This is a positive move, but a drop in the ocean. Some of the Help to Buy investment could have been put to better use here.

Foreign buyer ban: Not much to see here

The budget mentioned a two-year ban on foreign buyers purchasing established homes. This was not a new budget initiative. It comes into play on 1 April, 2025 (as in next week). Besides, foreign buyers were already banned from buying established homes, unless they were planning to build at least one additional home as part of the acquisition.

This tweak to the rule is expected to have very little effect when it comes to boosting supply.

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