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Daily Telegraph
06-05-2025
- Business
- Daily Telegraph
Explainer: How Labor's housing plan will impact you
Australia's housing market is poised for significant change under a newly elected Labor administration that has placed housing affordability at the centre of its policy platform. The Albanese government's comprehensive housing package promises billions in new investment, rent and first homebuyer support, crisis accommodation, and a crackdown on foreign investment. Some experts, however remain cautious, with Labor's housing plan likely to drive property prices higher in the near term before supply-side measures can take effect. Here's a quick breakdown on how Labor plans to tackle Australia's housing crisis. 100,000 homes for first home buyers Labor has committed $10 billion to build 100,000 homes over eight years, exclusively for purchase by first home buyers and locked away from property investors. They would be built in partnership with state developers. Universal 5 per cent deposit From 2026, income limits under the First Home Buyers Guarantee will be abolished, allowing any first homebuyer to purchase a home with just a 5 per cent deposit without having to pay Lenders Mortgage Insurance. Prices on eligible properties will also be lifted and there will be no income caps or participant limit. Smaller mortgages through Help to Buy Labor's Help to Buy shared equity scheme, where the government covers up to 40 per cent of a home's cost that first home buyers can buy out at a later date, is said to be expanded later this year. Smaller mortgages mean lower repayments and homebuyers will also be able to gradually buy out the government's stake over time, Build to Rent Property developers can access tax incentives to build apartments with a portion of units rented 'affordably' below market rate. Rent relief Labor has delivered a 45 per cent increase in Commonwealth Rent Assistance – the biggest back-to-back increase in over 30 years, helping over 1 million households better manage rising rents. Social and affordable housing push Through the Housing Australia Future Fund and other programs, Labor plans to deliver 55,000 social and affordable homes (28,000 already in development). The scheme will prioritise housing for vulnerable women, children, veterans, and key workers. The aim is to cut social housing waitlists. Support for crisis accommodation Labor is investing a record $1.2b into new crisis and transitional housing-for older women, young Australians, and those escaping family violence-to provide safe, emergency shelter for the most vulnerable. Apprentice incentive payments To meet ambitious housing targets, Labor is looking to incentivise more people into trades. This mean investing $78m to fast track the qualification of 6000 tradies to help build more homes across Australia. From July 1, 2025, eligible apprentices will also receive $10,000 in incentive payments, on top of their wages, over the life of their apprenticeship to work in housing construction. Foreign investor ban From April 1, 2025 to March 31, 2027, foreign investors, including temporary residents and foreign-owned companies, cannot apply to buy an established dwelling in Australia unless an exception applies. These limited exceptions will include investments that significantly increase housing supply or support the availability of housing supply, and for the Pacific Australia Labour Mobility (PALM) scheme. So what does it all mean? Ray White chief economist Nerida Conisbee provides some further insights. Deposit scheme expansion: a double-edged sword Labor's signature policy – extending the 5 per cent deposit scheme to all first home buyers regardless of income – represents a fundamental shift in housing accessibility. Under the expanded program, approximately 80,000 Australians are expected to enter the property market annually, up from the current 50,000 who access the income-capped version. 'By removing the substantial barrier of lenders' mortgage insurance and the need for a 20 per cent deposit, the policy dramatically lowers the entry threshold to homeownership,' Ms Conisbee said. 'For the typical Sydney property, this could mean the difference between needing a $200,000 deposit and requiring just $50,000 – potentially saving years of saving time for aspiring homeowners.' However, economic fundamentals suggest the policy is likely to drive price growth in the short term, Ms Conisbee ads. 'The Productivity Commission's research on first homebuyer incentives consistently shows that measures increasing purchasing power, without commensurate supply increases, typically lead to price escalation in targeted market segments,' she said. 'With more buyers able to enter the market simultaneously and competing for the existing housing stock, upward price pressure becomes inevitable.' Supply challenges amid construction headwinds Labor's ambitious target of building 1.2 million new homes over five years, including the 100,000 dedicated first-buyer properties, also represents an unprecedented construction challenge. Australia has never achieved this volume in any five-year period, according to Ms Conisbee, who said the closest being approximately 1.1 million homes last decade – a figure achieved with significant foreign capital investment. As it stands, the current construction environment presents substantial obstacles to meeting these targets,' she said. These include building costs, which continue to outpace house price growth, making new construction increasingly uneconomical. Industry insolvencies have also exceed 1200 annually and continue to rise, while Labor productivity remains low compared to historical standards. Construction time frames, meanwhile, have extended from 6.5 months pre-pandemic to over 10 months today. 'The expanding gap between housing demand and supply – now approaching 500,000 dwellings nationwide – will also likely continue to widen before significant new stock becomes available,' Ms Conisbee said. The paradox: short-term pain for long-term gain The paradox of Labor's housing policy is that while it risks exacerbating affordability challenges in the short term through price inflation, it may ultimately create the conditions for improved affordability in the longer term. Higher property prices, while challenging for new entrants, makes it possible for developers to overcome construction barriers and bring new supply to market. As values rise, previously marginal development projects become viable, and the industry gains additional capital to expand capacity. Ms Conisbee said Labor's complementary policies – including apprentice incentives, Build to Rent tax benefits, and the Housing Australia Future Fund – aimed to address supply-side constraints gradually. 'However, these measures will take time to yield significant results, likely trailing behind the immediate demand stimulus of the deposit guarantee scheme,' she said. Outlook: prices rising to meet construction costs The fundamental economic equation that will drive housing supply recovery is straightforward: house prices need to rise sufficiently to match or exceed construction costs. One of the key challenges plaguing Australia's housing supply has been that building costs have outpaced house price growth, making it more affordable in most parts of Australia to buy an existing home than build a new one. 'As house prices accelerate under Labor's policies, they will inevitably reach levels that make new construction economically viable again,' Ms Conisbee said. 'This price-to-cost equilibrium is the essential mechanism that will stimulate developers to increase supply despite the significant headwinds facing the construction industry. :As prices rise to match construction costs, developers will respond with increased output, gradually addressing Australia's critical housing shortage and setting the foundation for more sustainable affordability in the years ahead.'
Yahoo
12-02-2025
- Business
- Yahoo
Controversy over $280 Centrelink cash boost for struggling pensioners 'set to get worse'
Significant concerns have been raised about the number of retired Australians struggling in their twilight years as they rent. The Grattan Institute has found two in three older renters - like pensioner Debra Basham - are living in poverty, with the crisis "set to get worse" if the issue isn't addressed. The 67-year-old has missed meals as she doesn't have enough money to cover her bills and feels in a constant state of "struggle". The Grattan Institute has called for another increase to Commonwealth Rent Assistance (CRA),which last went up in September. However, NSW Tenants Union CEO Leo Patterson Ross told Yahoo Finance another cash boost won't solve the problem if wider issues in the rental market are not tackled. "Unless you do something about rent prices, you're always chasing increasing rents," he said. "A 10 per cent increase in Rent Assistance is kind of helpful, but if rent went up 20 per cent, you're still behind. "You also have to be already receiving Centrelink payments and already be in a home to be eligible. So, that means there's a whole bunch of people who should be getting more support but aren't." RELATED Cash warning for 4.2 million retirees over impending RBA interest rate cut Rare $1 coin worth up to $350: 'Lucky to find one' NAB, Commonwealth Bank cut term deposit interest rates in warning signal for Aussies: 'Act quickly' More than 165,000 Australians aged between 55-64 receive Commonwealth Rent Assistance. Rent has risen dramatically across all capital cities over the last four years, according to Domain. Weekly rent in Sydney has risen by up to $540, in Brisbane it's gone up by $410, while Perth has seen a $390 jump. While this has stabilised, experts have said prices are not set to drop. The CRA last increased in September by 10 per cent thanks to a measure contained in the 2024-25 Federal Budget, which gave single people between $12 to $19 extra per fortnight. The issue for pensioners is that those who take the Centrelink payment have faced an increase in rent of 1.5 times the maximum CRA payment rate since 2001, the Grattan report found."Even after these increases, a single retiree who relies solely on income support can afford to rent just 4 per cent of one-bedroom homes in Sydney, 13 per cent in Brisbane, and 14 per cent in Melbourne," it said. "Australia is failing too many retirees who rent. Only a further substantial boost to Rent Assistance can ensure that all Australians get the dignified retirement they deserve." Ross told Yahoo Finance that 10-15 per cent increases are nowhere near enough. "Most of the calls from the community and from Grattan are at more like the 40 to 50 per cent level. And so there's definitely scope for rent assistance to rise to that level," he said. Boosting CRA by up by 50 per cent would take the maximum rate up by $53 per week or $2,750 per year for singles, and $40 per week or $2,080 per year for couples. Grattan said this would allow retirees to afford up to $350 per week on rent, while retired couples could afford $390 per week, which would be enough to rent the cheapest 25 per cent of all one or two-bedroom homes in Aussie capital cities. These increases, which would also help everyone on CRA, not just retirees, would cost taxpayers $2 billion per year. The housing crisis in Australia has forced many Australians to rent as they can not afford their mortgage in retirement, or could not get into the market at all. Women aged over 55 are of particular risk of homelessness in Australia, with many in precarious rental situations. Some have lost their family home in separation after being primary carers for children, diminishing their earning and ability to build a superannuation nest egg. Basham retired from her job as a cleaner last year and has since found it difficult to cover her bills. "You just struggle," she told The Project. "I've got animals, I feed them first, and if I've got nothing left, then I go without. "If I've got a slice of bread, I'll just have a slice of bread for tea." National Seniors Association CEO, Chris Grice, told Yahoo Finance that too many retirees are facing uncertain futures due to this trend. 'Housing security and affordability is a huge concern for many older Australians, with an increasing number of older people unable to afford their own home and relying on the precarious and competitive rental market," he said. The association is not only calling for the rate of CRA to be lifted but for its indexation to be tied to changes in rental prices, rather than overall inflation. The CRA program is only accessible to Australians receiving the following social security payments: ABSTUDY - Living Allowance Age Pension Austudy Farm Household Allowance JobSeeker Payment Special Benefit Youth Allowance To be eligible for assistance, you need to meet minimum rent payment requirements. Situations also change depending on how many people you live with and if you have any dependants. The maximum fortnightly payment for a single person living alone is $188.20 every two weeks, or $125.47 for a single person in a share house. You can find the requirements in to access your portfolio
