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What is affordable housing?

What is affordable housing?

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We all understand what social housing is. But affordable housing means different things to different people.

When Dr Jim Charmers announced the National Housing Accord in last night’s federal budget, he talked about affordable housing. In that context, he is talking about rental accommodation (both private and goverment owned) with varying degrees of qualification and government support.

When a home buyer talks about affordable housing, they are talking about the price of buying a home. Both State and Federal governments have shared equity schemes to help people buy a home, but the main thrust of last night’s budget (as it related to housing) was providing more government supported rental accommodation.

Recent posts here, have encouraged less regulationless intervention and streamlining the private sector to deliver housing faster and cheaper for people to buy a home.

Social and affordable housing (supported rental accommodation) are state responsibilities, but a national approach brings more options to the table. The National Housing Accord with the states and territories, has an “aspiration” to deliver 1 million homes over 5 years from 2024 – 2029. Let’s hope this policy achieves that goal. Most of the heavy lifting in this policy remains with the states and territories and private sector to make this happen. The federal government is committing to 10,000 homes out of the 1 million. This is outside the previously announced 30,000 homes as part of the Housing Australia Future Fund.

The policy focuses on the supply side of the market (additional housing) rather than the demand side (cost of living support) which is inflationary. This includes releasing greenfield and brownfield (use change) sites to the market for development of new housing supply.

The Budget announcement says it has tapped in to the $3.3 trillion national superannuation sector for capital investment. The hurdle for investment capital into social and affordable housing is the lower returns it offers. The budget bill proposes to “top up” or bridge the gap between the return on social and affordable housing investment, up to what the capital markets require.

In many areas of Australia, the housing need is immediate, but this policy doesn’t propose housing until 2024. Is says this is due to supply side constraints of materials and labour. I suspect it will also take some time to work through all the multi-layer government processes.

The downsizer incentive to help free up the housing market will exempt proceeds from home sales from asset pension testing for 2 years and reduce the age threshold to put some of the house sale cash into super from 65 to 60.

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