The 2024 federal budget brings significant measures aimed at tackling Australia’s housing crisis, allocating over $11 billion towards housing and new home construction. Here’s a breakdown of the key initiatives and their potential impact on the housing market.
Boosting Housing Supply
The government has committed over $11 billion to enhance housing across Australia:
- $1 billion for crisis accommodation for women and children fleeing domestic violence.
- $1 billion for infrastructure supporting new housing, including roads, water, and community facilities.
- $9.3 billion over five years, in partnership with state and territory governments, to build and repair social housing.
This investment is part of a broader strategy to deliver 1.2 million new homes over the next five years. Additionally, universities are required to increase purpose-built student accommodation to address housing shortages.
Addressing the Skilled Labour Shortage
A significant challenge in the housing sector is the shortage of skilled labour. The budget allocates $90.6 million to attract more apprentices, provide fee-free training, and streamline the visa program for in-demand trades. This initiative aims to ease the labour constraints hampering new home construction.
Help to Buy Scheme
The government is pushing for the Help to Buy shared equity scheme, which would allow the government to contribute up to 40% of a home’s purchase price. Although facing opposition, this scheme could significantly assist homebuyers if passed.
Tax Cuts and Cost-of-Living Relief
The budget includes updated stage three tax cuts, benefiting all taxpayers, especially low- and middle-income earners. For instance, a taxpayer earning $98,217 will see a tax cut of about $2,134 compared to the previous year.
Student Debt Relief
Changes to the indexing of student loans will see loans indexed to the lower of CPI or the wage price index. This measure is expected to eliminate about $3 billion in student debt, providing financial relief to three million Australians.
Welfare and Rent Assistance
The budget hints at increased support payments and rent assistance for welfare recipients, potentially adopting recommendations to increase Jobseeker payments and Commonwealth rent assistance.
Infrastructure Investments
New infrastructure spending includes:
- $1.9 billion for 14 road and transport projects in Western Sydney.
- $100 million for bicycle and walking paths.
- $50 million for Canberra’s light rail extension.
These investments aim to support the growing housing demand by improving essential infrastructure.
Combating High Inflation and Housing Trends
High inflation remains a critical concern, likely necessitating rate hikes by the Reserve Bank of Australia (RBA). Despite higher interest rates, AMP chief economist Shane Oliver predicts a 5% increase in house prices this year due to the housing supply shortfall. However, potential rate hikes and higher unemployment pose risks to this outlook.
Tax Compliance and Anti-Money Laundering Measures
The Australian Taxation Office (ATO) will closely scrutinise rental property deductions and undeclared income. Additionally, new laws will expand reporting obligations for real estate agents, lawyers, and accountants to prevent money laundering, with a $166 million budget commitment.
Rising Rents and Housing Construction Needs
Rents have surged significantly since COVID-19 lockdowns, adding pressure on tenants. Economists stress the urgent need for increased housing construction to alleviate rental pressures and address the housing shortage.
Federal Government’s Housing Commitment
Prime Minister Anthony Albanese announced a new $9.3 billion National Agreement on Social Housing and Homelessness, aiming to combat homelessness and support social housing. This includes doubling annual homelessness funding to $400 million and allocating $1 billion to the National Housing Infrastructure Facility.
Conclusion
The 2024 federal budget’s comprehensive measures address critical issues in the housing market, from boosting supply and skilled labour to providing financial relief and infrastructure investments. These initiatives aim to stabilise the housing market and support Australians in the face of ongoing economic challenges.
To find out more about the federal budget, visit: https://budget.gov.au/