The 2022 Australian federal election will be held on 21 May 2022 to elect members of the 47th Parliament of Australia. As the election nears our Senior Economist and Data Scientist Dr. Kevin Hoang unpacks each side’s housing policies.
The context
Housing prices have increased significantly across Australia by 22% (26-30% in Sydney, Brisbane and Adelaide) in the last 12 months to February 2022. Since 2019, at the time of the last election, prices have gone up by 30-40% as of March 2022 in combined capital cities, while wage growth has barely kept up with inflation. Therefore, housing affordability is expected to be a key agenda item in the next election contest.
In the 2019 election, the Labour Party proposed scrapping the decade-long negative gearing policy, aiming to reduce the number of investors entering the market and improve affordability for first home buyers. However, the proposed policy was not in favour of the majority of voters due to the fact that 70% of Australian people are homeowners: the last thing they want to see is a fall in housing prices and their wealth.
The cost of construction has increased by 38% since the start of COVID in March 2020 due to supply chain disruptions and labour shortages. We project the cost of construction will remain high due to the widespread floods in NSW and QLD, as well as the emerging crisis in eastern European countries will definitely push up the cost of inputs.
In reviewing the housing policy focus of the Liberal/National Parties and the Labor Party, we find housing affordability has been and will be a major priority, which is not aimed to drive down housing prices, but to improve accessibility to housing for those who really need help.
The Liberal/National Party Housing Policy: focusing on First Home Buyers
First Home Super Saver Scheme: enabling first home buyers to save more quickly and build a larger deposit, with concessional tax rates.
The Government is also helping first home buyers, through:
The First Home Loan Deposit Scheme – helping another 10,000 first home buyers buy a home with a 5% deposit.
The New Home Guarantee – helping 10,000 people build or buy a new home with a 5% deposit.
The Family Home Guarantee – helping 10,000 single parents purchase a home with a 2% deposit.
HomeBuilder was intended to support confidence in the residential construction sector and encourage consumers to proceed with purchases or renovations that may have been delayed due to uncertainty around the effects of the COVID-19 pandemic.
Labor Party Housing Policy (if elected): creating a $10 billion off-budget Housing Australia Future Fund to build social and affordable housing while creating thousands of jobs.
20,000 social housing properties.
4,000 of the 20,000 social housing properties will be allocated for women and children fleeing domestic and family violence and older women on low incomes who are at risk of homelessness.
10,000 affordable housing properties for frontline workers
This will directly support 21,500 full-time jobs across the construction industry and the broader economy, per year, over 5 years, nationwide - one in 10 direct workers on site will be apprentices.
$200 million for the repair, maintenance and improvements of housing in remote Indigenous communities, where some of the worst housing standards in the world are ensured by our First Nations people.
$100 million for crisis and transitional housing options for women and children fleeing domestic and family violence and older women on low incomes who are at risk of homelessness.
$30 million to build more housing and fund specialist services for veterans who are experiencing homelessness or at-risk homelessness.
A total of $1.7 billion dollars will be allocated to women. $1.6 billion for long-term housing, and an additional $100 million for crisis and transitional housing options for women and children fleeing domestic and family violence, and older women on low incomes who are at risk of homelessness.
Despite rising property values and growing unaffordability for first home buyers, there is a low likelihood the government will intervene to drive down the prices. In fact, the construction industry is one of the major pillars of the Australian economy: it generates over $360 billion in revenue per year, producing around 9% of Australia’s Gross Domestic Product, and employing 1.2 million people. Most businesses in this industry are either sole traders or micro, employing less than 20 people. Therefore, it is a priority for the government to deploy policy measures to support the industry when needed.
If you would like to talk with our team about where we see the Australian property and construction market heading post-election, please get in touch at enquiry@milkchoc.com.au to book a time.
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