The Federal government called for revised FY2021 Budget submissions to which PowerHousing has updated its FY2020-21 Budget submission in consultation with our Roundtable and Communities of Practice chairs, our Board Budget subcommittee and in consultation with peaks such as CHIA and MBA.
The revised Pre-Budget Submission has a focus on supporting the Morrison Government’s plan for recovery from the impacts of the COVID-19 pandemic, with proposals focused on growing the economy, creating jobs for Australians and building a legacy of a stronger housing system. There is overwhelming evidence that Australia was in an affordable housing crisis which was being felt at many levels in the community, particularly those most vulnerable, and this has been exacerbated by way of the pandemic. Key impacting market forces and proposed solutions for consideration are summarised further below.
The outlook – particularly for lower income households including key workers, first home buyers, investors and seniors – will remain bleak if housing market equilibrium is not secure. There is a window to develop a variety of policy levers and initiatives, building on the qualified success of NHFIC. These measures would seek to:
- provide support for the growing numbers seeking social and affordable housing as a result of the COVID-19 crisis;
- reduce pressure at multiple points along the housing continuum;
- see international and institutional investment in an affordable asset class built in Australia; and
- stimulate PowerHousing Members to build 8-30,000 affordable dwellings per year.
Our submission is structured around identifying, stabilising and partnering with government on the following measures:
- National Housing Focus – Federal Government is best positioned amidst the National Cabinet and its housing subcommittee to work with an expert panel of national leaders to tackle the housing challenges facing the country amidst the greatest economic downturn since World War II.
- Support National Housing Equilibrium – With 10% of mortgages being deferred, unemployment suppressed by the effective JobKeeper, market supply forecast to decline and affordable housing demand to soar, stabilisation across 10 million Australian households will be needed to create strength and ongoing confidence. Stabilisation of Australian housing can be achieved using the following elements:
- Realign JobKeeper to a HomeKeeper subsidy for three years
- Tackle affordable housing supply by investing in HomeKeeper supply through CHPs, by way of a lump sum capital payment or a ten-year recurrent payment
- Provide a HomeBuyer Guarantee for HomeKeeper tenants to get back to or start afresh in home ownership
- Low cost shared equity program for current home owners to retain their home through the crisis.
- National Housing Jobs Creation – Record housing supply is heading toward historic troughs in activity that will be evident by the end of 2020. Stimulus in affordable housing will be needed to provide additional supply to meet growing demand and also to preserve millions of trade and paraprofessional engagements that occur when a new home is built. This can be achieved by:
- Activating the elements such as maintenance, retrofits, and new build in affordable housing, which will be needed to keep housing active
- Shared Equity with CHPs delivering new stock
- Further expansion with NHFIC finance investment to support supply
- Invest in trades training for those CHP and HomeKeeper tenants
- Attract Affordable Housing Investment – Affordable housing with Environmental, Social and Governance outcomes are growing as a reliable and acceptable investment asset class. By the end of the COVID crisis there will be new affordable housing supply channels if backed by Federal Government seed investment. Such channels can create 10-30,000 additional affordable homes per annum to meet rising demand, preserve jobs and see a perpetual international asset class operational that rides through recessions and crisis such as COVID-19.
- Specialist Disability Accommodation and Universal Design – There are still 4,000 young people with specialist disability in aged care today. Estimates are that 3-5,000 new homes could be built over the coming 2-3 years to create much needed SDA homes for NDIS clients. In turn, this drive jobs and supports investment as part of a wider housing asset class in Australia.
- COVID-19 Other – Potential role for partnering with a Community Reinvestment, encouraging deposit institutions to help meet the credit needs of the communities in which they operate, including low and moderate income neighbourhoods as it does in the US. Also tax credits could provide a stable investment incentive to create low cost housing.
The submission focuses deeply on a real challenge in that the data shows no clear signs of a downturn for FY2020, and those numbers that will indicate an issue for FY2021/22 won’t be published by ABS and others for months to come. Balancing a new market equilibrium, with property stimulus, that feeds into longer-term new build programs is tricky to get right. There is expectation of a pickup in FY2021 forecasts of 15-25,000 dwellings per month on the back of HomeBuilder in FY2021 (pulling through some of the substantial pipeline of approvals), but beyond this the drivers for market housing delivery are hard to see. Stimulating the new home building market makes considerable sense as it can restore confidence and activity in the Australian economy.
PowerHousing will continue to escalate the position that social and affordable housing can act as a shock absorber to fill the primary gap in market demand. The pipeline must be primed in the next six months as the drop becomes evident.