Housing crisis ‘time bomb’ alarm sounded
Australia is set to fall short of the ambitious 1.2 million national Housing Accord goal by more than 400,000 homes, which risks pushing average rental prices up by nearly $100 a week.
Australia is set to fall short of ambitious housing goals by more than 400,000 homes in capital cities, representing a major gap that risks pushing average rental prices up by nearly $100 a week.
The new figures from the Property Council of Australia – which focus on houses built only in capital cities – come as the Greens launch a direct appeal to Labor ahead of next week’s budget, calling on Jim Chalmers to urgently reform negative gearing and capital gains tax to address the housing crisis.
According to the report, conducted by Mandala Partners, the nation needs to build an extra 462,000 homes in “well located areas” to meaningfully push down prices and rents, as intended by the Housing Accord.
However, the Accord – which aims to have 1.2 million homes built by the end of the decade – includes properties constructed outside of capital cities.
“2025 is the year for Australia to redouble our housing supply efforts with the urgency and commitment this crisis demands,” Property Council chief executive Mike Zorbas said.
“Missing the target by 462,000 new homes by July 2029 would set off a housing affordability time bomb. Thankfully, we can avoid this.
“Ideally, hitting the targets will make housing more accessible and more affordable for millions of Australians.”
The Property Council called on Labor needed to institute a range of policies to fill the housing gap, such as doubling the $3bn New Home Bonus, which offers states incentive payments for building more homes than their share of the target.
In doing so, the government could add $128bn in gross value to the economy over the next five years and slash the rents of people in NSW – which currently faces the biggest housing gap of 185,000 homes – by $130 a week.
A letter from Greens housing spokesman Max Chandler-Mather and economics spokesman Nick McKim also urged the government to unveil a range of other housing policies before the next election, chiefly in reforming negative gearing and capital gains tax.
“It’s time for your party to make a choice – do you represent the property investor who owns 100 houses or do you stand with the young teacher or nurse who has given up on owning a home because negative gearing and capital gains discounts have stacked the deck in favour of the wealthy?” the letter, seen by The Australian, said.
“We are in a historic housing crisis and this requires structural changes to our housing system, Australia cannot afford another 25 years of unsustainable house price growth. You and your government have the chance to step up and choose to give hundreds of thousands of Australians the life-changing opportunity to buy a house in this coming budget.”
The Greens letter sent this week follows Labor directing Treasury to undertake modelling on reforms to negative gearing and capital gains tax over the last term of government, while a growing number of backbenchers quietly supported the idea of overhauling the tax benefits.
“We applaud your government for seeking advice from Treasury on changes to negative gearing and the CGT discount, and we call on you to take the opportunity of this upcoming budget to reform these deeply broken tax handouts,” the letter said.
“We were pleased to see a number of your colleagues last year join the broad national consensus of economists, housing experts and everyday people that is forming in support of scrapping these destructive tax handouts.”
The Australian understands major reforms of negative gearing and capital gains tax would likely be top of mind for the Greens in a power-sharing arrangement with Labor, though the minor party’s official list of priorities is yet to be determined.
In Queensland, filling 96,000 homes would mean an $80 saving a week, while Victorians could save $50 a week in rent should the 71,000 housing shortfall be filled.
However, the Property Council warned that Labor needed to institute a range of policies to fill the housing gap, such as doubling the $3bn New Home Bonus, which offers states incentive payments for building more homes than their share of the target.
Labor must also establish a cabinet housing subcommittee that would consider all available levers to support housing supply.
“2025 is the year for Australia to redouble our housing supply efforts with the urgency and commitment this crisis demands,” Property Council chief executive Mike Zorbas said.
“Missing the target by 462,000 new homes by July 2029 would set off a housing affordability time bomb.”
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