What the experts say the Federal Government’s budget means for the Australian housing market
The Albanese Government is initiating a range of measures to tackle the housing crisis, but experts fear it’s not enough
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The $11.3 billion Homes for Australia plan unveiled in this week’s Federal Budget includes an additional $1 billion in funding – on top of $500 million previously pledged – to help the states and territories fast-track the building of ‘enabling infrastructure’ such as new roads, sewers and energy, water and community infrastructure to create more areas for buyers to build their new homes.
To support this goal, the Federal Government has also committed $90.6 million to grow Australia’s construction workforce, including 20,000 new fee-free places at TAFE and VET vocational colleges, as well as more skilled migrant visas. CoreLogic research director Eliza Owen commented: “This could add to labour supply to the tune of 22,000 workers, representing 1.7 percent growth in an industry where employment had an average quarterly increase of 0.7 percent over the past decade.”
More construction workers are desperately needed not only to help the Federal Government reach its target of 1.2 million new homes within five years, but also to offset the impact of construction company insolvencies. Ray White economist Nerida Conisbee points out that construction insolvencies continue to rise, with the latest ASIC figures showing 2,758 construction companies entered external administration over the 12 months to 31 March 2024.
Prime Minister Anthony Albanese said the budget encouraged the states and territories to “kick start building”. He commented: “This Budget means more tradies, fewer barriers to construction, less talk and more homes. This isn’t about one suburb or one city or one state. It’s a challenge facing Australians everywhere and it needs action from every level of government.”
The Federal Government is also seeking to reduce demand in the private rental market following a 43.5 percent surge in the national median rent from $437 per week in August 2020 to $627 per week today, according to CoreLogic. The budget provides money for more social housing, plus a plan to make universities build more student accommodation, thereby removing some demand in the private rental market from low-income workers and domestic and international students.
Budget measures include an additional $423.1 million for the National Agreement on Social Housing and Homelessness, taking total funding to $9.3 billion over five years, under which more social housing will be built and existing housing repaired. REA senior economist Paul Ryan said: “All up, the government expects to support the building of 55,000 new social and affordable homes by 2029 – representing a 12 percent increase in the total number of available homes across the country.”
The plan to legislate new requirements for universities to build more accommodation follows a huge surge in immigration, with an almost 550,000 net increase in migrants over the 12 months to 30 September 2023, the bulk of which were international students and temporary workers.
Commonwealth Rent Assistance is being increased for the second year by 10 percent this time, following a 15 percent increase in last year’s budget. The two boosts represent about a $35 per week increase in assistance to almost one million Australians. The Budget also includes $1 billion for crisis and transitional accommodation for domestic violence victims and youth in distress.
AMP chief economist Dr Shane Oliver said the budget’s housing measures were unlikely enough to meet the goal of building 1.2 million new homes over five years. Dr Oliver said the supply shortfall was set to remain “unless immigration plunges”. Treasurer Jim Chalmers says net overseas migration next year is expected to be half what it was this year.
Dr Oliver said the budget’s housing measures were also unlikely to alter the outlook for home prices. He expects modest growth this year. Median dwelling values have already risen 2.2 percent between January 1 and April 30, following an 8.1 percent lift in 2023.
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The Republican nominee says it would help bring down home prices, though these buyers account for a fraction of U.S. home sales
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Former President Donald Trump said he would ban undocumented immigrants from obtaining home mortgages, a move he indicated would help ease home prices even though these buyers account for a tiny fraction of U.S. home sales.
Home loans to undocumented people living in the U.S. are legal but they aren’t especially common. Between 5,000 and 6,000 mortgages of this kind were issued last year, according to estimates from researchers at the Urban Institute in Washington.
Overall, lenders issued more than 3.4 million mortgages to all home purchasers in 2023, federal government data show.
Trump, the Republican presidential nominee, made his comments Thursday during a policy speech to the Economic Club of New York in Manhattan.
Housing remains a top economic issue for voters during this presidential election. Rent and home prices grew at historic rates during the pandemic and mortgage rates climbed to levels not seen in more than two decades. A July Wall Street Journal poll showed that voters rank housing as their second-biggest inflation concern after groceries.
Both major candidates for the 2024 presidential election have made appeals to voters on housing during recent campaign stops, though the issue has so far featured more prominently in Vice President Kamala Harris ’s campaign.
Trump has blamed immigrants for many of the nation’s woes, including crime and unemployment. Now, he is pointing to immigrants as a cause of the nation’s housing-affordability crisis. Yet some affordable-housing advocates and real-estate professionals said Trump’s mortgage proposal would fail to bring relief to priced-out home buyers.
“It’s unfortunate that given the significant housing affordability crisis that is widely acknowledged across most partisan lines, we are arguing about a minuscule segment of the market,” said David Dworkin, president of the National Housing Conference, an affordable-housing advocacy group.
Gary Acosta, chief executive of the National Association of Hispanic Real Estate Professionals, a trade organization, said, “It’s just another effort to vilify immigrants and to continue to scapegoat them for any issues that we have here in the United States.”
A Trump campaign spokeswoman didn’t immediately respond to a request for comment.
Undocumented immigrants in the U.S. can obtain an obscure type of mortgage designed for taxpayers without Social Security numbers, most of whom are Hispanic. The passage of the USA Patriot Act of 2001 allowed banks to use identification numbers from the Internal Revenue Service as an alternative to Social Security, extending a number of financial services to people without legal status for the first time.
Mortgage loans for undocumented immigrants are typically higher interest and borrowers include legal residents who have undocumented spouses, Acosta said. Lenders include regional credit unions and community-development financial institutions.
In his speech, Trump said that “the flood” of undocumented immigrants is driving up housing costs. “That’s why my plan will ban mortgages for illegal aliens,” he said.
Trump didn’t elaborate on how he would enact a ban on such loans.
Though mortgages for undocumented people living in the U.S. are relatively rare, residential real-estate purchases by foreign nationals are big business , especially in expensive coastal cities such as New York and Los Angeles. These sales have declined in recent years, however.
Close to half of foreign purchases are made by people residing abroad, while the other half are made by recent immigrants or residents on nonimmigrant visas, according to an annual survey by the National Association of Realtors. Many affluent foreigners buy U.S. homes with cash instead of obtaining mortgage financing.
In his Thursday speech, which focused mostly on other economic matters such as energy and taxation, Trump proposed other measures to bring down housing costs, including cutting regulations for builders and allowing more building on federal land. Similar ideas appeared in the housing policy outline Harris released in August .
The former president has spoken on housing-related issues in speeches at other recent campaign stops, including in Michigan last month, where he touted his administration’s 2020 overturn of a policy that had encouraged cities to reduce racial segregation .
“I keep the suburbs safe,” Trump said. “I stopped low-income towers from rising right alongside of their house. And I’m keeping the illegal aliens away from the suburbs.”
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