Housing supply

Housing supply crisis looms over election

Australia does not have a housing affordability crisis, it has a housing equality crisis and little is being done by either major party to close the growing gap according to some industry heavyweights.

Housing affordability remains a hot topic ahead of the federal election, with both major parties pledging to tackle the issue, but neither has a plan to address the housing shortage.

Election commitments

In a bid for re-election this weekend, the LNP announced a Super Home Buyer Scheme, which would allow first-time buyers to withdraw up to $50,000 from their superannuation to pay a security deposit.

It follows the lowering of age thresholds to 55 for lump sum payments into retirement accounts after the sale of a property, aimed at incentivizing downsizing and unlocking the property market.

The Labor Party earlier this month announced a 40% ownership scheme, in which the government would own part of the property up to $380,000, limited by income caps of $112,000 per household.

While the LNP’s two-pronged approach has been welcomed by the industry, one pension body has criticized the move.

Pension raid won’t solve affordability

Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said superannuation raids would inflate property prices and do nothing to address housing affordability.

“Accessing your super early will not bring you closer to your dream home or solve Australia’s housing crisis. Using super as a deposit will drive up property prices, leaving Australians with higher debt and depleted retirement savings, Scheerlinck said.

“First-time home buyers are being asked to choose between a home and retirement savings, they should be able to have both.

“The Australian government must address this modern inequity by tackling supply issues rather than raiding. A first home should not come at the expense of dignity in retirement.

Corelogic’s head of research, Eliza Owen, said the scheme would favor affluent young people and make the housing equity problem worse.

“The actual value accessible through this program is relatively low for the typical young first-time home buyer…they are generally younger and the median super balance was only $25,000 for those aged 25-34” , said Owen.

“At 40%, the program would only offer $10,000 at the midpoint, or the equivalent of some state-based first-time homeowner grants…the program could help increase the amount of a standard deposit by approximately 1%.”

▲ Subscription rate could be sluggish, which would insulate the market from demand-side shocks, but not solve supply issues according to Corelogic research.

Owen said first-time homebuyer turnout could be lower with the homebuilder ripple effect, lower interest rates and other stimulus.

She said the downsizing incentive would theoretically free up more established housing supply for young families, and that lowering the age threshold would qualify about 1.3 million households nationwide for the program.

But the lump sum pension deposit had only been used by around 22,000 households in the three years to May 2021.

Investigation report recommended superannuation as collateral for home loan

Using the superannuation as collateral for a home loan was one of the key recommendations of the Housing Affordability and Supply Survey, which was released earlier this year.

HIA chief executive Graham Wolfe said he welcomes the Super Home Buyer Scheme, and that it was something HIA had been pushing for.

“Access to finance for a down payment is the biggest hurdle for Australians trying to buy their first home, especially those paying rent while saving for their down payment,” Wolfe said.

“When the house is sold, they can put the money back into their retirement fund with a proportion of the capital growth in value of their house… they are actually borrowing from themselves.”

Property Council chief executive Ken Morrison said the downsizing incentive was welcome news, but said more needed to be done to meet housing supply.

“The Super Home Buyer Scheme is another demand-side measure supporting the laudable goal of home ownership, but the main challenge is to provide the housing supply and choice our growing communities need. “, did he declare.

“The decline in supply and the growth in demand are a dangerous position for housing affordability.

“While targeted demand-side policies to support aspiring home buyers are welcome, a supply crisis is brewing and that must be the focus of whoever wins government next Saturday.”

“Affordable housing for the long term, not for elections”

Australian Institute of Architects national chairman Tony Giannone has called on major parties to appoint a federal housing minister and create a 30-year national housing strategy.

“Adequate housing should be a right in such a fortunate country as Australia, but it is not,” he said.

“We need a national, centralized system to monitor housing supply and set targets for social and affordable housing for those in need.

“Social housing and affordable housing initiatives should be implemented for the long term, not for the next election.

BuyersBuyers chief executive Doron Peleg said there was a “chronic shortage of family-friendly housing” near employment hubs.

“Market supply remains a major challenge with a lack of a coordinated approach between federal, state and local governments,” Peleg said.

“This systematic failure is very likely to continue into the near future. As long as this is the case, property prices in the landlocked suburbs where demand is concentrated will likely rise at a rate above inflation.