PowerHousing again joined around 60 national peak leaders at the Treasury lockup for the Federal Budget in Canberra. The FY2022 Federal Budget pulls many levers to help Australia emerge from its biggest health emergency in generations, but leaves the door open for further housing measures to tackle a rapidly escalating housing affordability crisis that has been an unexpected symptom of the COVID crisis.
Market led announcement to support the delivery of new housing show that housing stimulus works and the HomeBuilder program has helped create additional new homes, kept many hundreds of thousands in the residential workforce employed, whilst driving downward pressure on pricing, but affordability issues prevail.
Federal Budget Housing measures have provided a market led approach to drive jobs, and secure economic activity, but there will be a time soon when further affordable housing levers will need to be pulled to address rising affordability challenges and underpin activity drops forecast by Treasury.
There is welcome focus in the budget on women’s safety, mental health, aged care and the NDIS which supports other measures with a health and COVID recovery focus, but ultimately positive health outcomes starts with the home.
There is an additional $124.7 million in funding which will allow the states and territories to bolster public housing stocks or to meet their social and community housing responsibilities under the 2011 Fair Work decision on Social and Community Services Wages, but emerging challenges are outlined in the budget.
Budget wage growth forecasts have stagnated to between 1.25 and 1.5% in FY2022 and FY2023, yet house prices have exploded and rental vacancies have declined. There are emerging challenges facing many Australians who seek to buy or rent, coupled with a projected fall in activity set to reduce new stock.
Federal Budget dwelling investment estimates show that HomeBuilder stimulus has brought forward demand, but beyond this is a significant forecast decline. With every new home providing periods of work for 43 trades and subtrades, forecast declines will see less homes built, jobs lost and a fall in supply to increase price and an erode affordability. What further places this market demand drop and supply slowdown at risk is a -77,000 forecast for Net Overseas Migration with double blow of many ex-pats returning overseas in FY2022.
What the budget does show is that the market measures have almost run their course in bringing forward demand. The pent up affordable demand can in turn be activated to create additional affordable supply, put downward pressure on pricing and preserve the construction jobs that have underpinned the 2021 Federal budget turnaround.
|Previous Budget Oct 2020||-8.8%||-11%||7%|
|Budget May 2021||-8.1%||2.5%||0%||-1.5|
The table above shows the previous October 2020 budget estimated for a drop away of activity for 2020-21. The May 2021 Budget then shows the revised increase in dwelling estimates for the 2020-21 period. The May 2021 Budget then shows dwelling investment declines in FY2022 and FY2023.