By Andrew Wicks
Last night’s budget vowed to “help more Australians realise their goal of home ownership.” However, we’ve been told the same thing for the last three years.
In last night’s budget, we got a whiff of something familiar. The Coalition wants to help us find our forever home. There are three main points that they want us to focus on. HomeBuilder, the reduced rates needed to secure a home loan, and using more of our superannuation to enter the housing market.
HomeBuilder (another of Morrison’s grating portmanteaus) was instituted to “boost the private construction sector, motivating people to build new houses or significantly renovate existing homes, creating work for tradespeople and others in the industry,” per Kelsie Iorio of the ABC.
However, the conditions were steep, as you’d have to invest $150,000 in the renovation, in order to secure a further $25,000 in funding. While budget papers show that 120,000 applications were received, the Morrison government isn’t telling us how many of those applications were successful.
Elsewhere, there are 10,000 more spaces for the New Home Guarantee scheme, which allows us to buy or build a home with a 5% deposit. The kicker is that existing homes are not part of the scheme. This matters, of course, because in the real world, those looking to buy their first home often live in either capital cities or built-up urban areas, you know, where the jobs are. No matter, as the budget wants us to focus on the nebulous concept of the rural housing boom, which sounds a lot like Barnaby Joyce telling us to move to Tamworth.
The prize swine of the budget is the helping hand offered to single parents. Per the budget, if you have children, you can have a house for 2% of the value. I mean, we can ignore the way that debt and interest works (a lower deposit means more debt, and thus, more interest), but we should also note that the offer is limited to a minuscule 10,000 applicants.
But hey, it’s something, right? Something to increase housing affordability? Well, no. For a lucky few (and an aspirational many), it sounds good – the idea of a property for less. But, if we look deeper, we’re being sold a pie made of pork, or a house made of lies.
As it stands, the average first home buyer can use $30,000 of their super to put toward their deposit, provided they live in the house that they’re planning to buy. The new budget has increased that measure to $50,000. Which makes sense, until you think about it.
As Richard Holden, Professor of Economics at UNSW put it, “If everyone can take out big slabs of superannuation to buy houses, then the prices of houses will just go up more… this kind of subsidy just transfers the retirement savings of younger people to older people, and does nothing for affordability.”
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Social housing has been summarily ignored in this budget and the two previous.
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In 2019, Josh Frydenberg said that house prices would continue to fall, and might take a $60,000 tumble by 2020. Announcing the budget, he said the fall in dwelling investment was a concern for the economy, and warned it was the “worst possible time” to switch to Labor. To be fair, house prices fell by a percentage point in the month of the budget, but if we step back and look at the entire timeline, the image is closer to Picasso’s Guernica than Josh’s potentially thorned rose garden.
In March 2016 the median value of a capital city property was $550,000. Five years later, the same property is worth $693,936, an increase of 26 percent. In 2021, the median deposit needed for a house in New South Wales is $128,469.
So, clearly, while working the average job can no longer afford an average house, what we need is housing we can afford. Affordable housing, if you will. So, what has been done to remedy this?
Well, absolutely nothing. But alongside housing affordability, social housing has also been low-balled in this budget and the two before it.
In April 2019, Frydenberg declared that “housing affordability is a priority for our government”. To prove it, he announced no new measures in that year’s budget. Instead, he gave the same amount of money to the National Housing and Homelessness Agreement. The agreement (and the investment) has been repeatedly panned for not being enough to match the demand.
In 2018, Vivienne Milligan wrote, “… while there are positive directions in the new agreement, the funding deficit remains an issue. Despite not increasing its funding, the Commonwealth hopes the states and territories will increase theirs. The Commonwealth, however, has failed to extend or replace other large housing programs that operated in the past decade. These included the now-closed National Rental Affordability Scheme, which resulted in over 36,000 new affordable rental houses, and a A$5 billion national partnership to improve housing supply and conditions in remote (largely Indigenous) communities.”
A year later, the NT St Vincent de Paul chief executive Fran Avon told the ABC that her organisation was at capacity, and was turning away around six calls every day because of funding constraints.
“For some people, the situation is I need accommodation tonight and we have to say we can get you something in six weeks’ time… by that time their situation is either much worse or they’ve had to find alternative solutions,” she said.
After Frydenberg’s 2019 announcement, Mission Australia chief executive James Toomey said the government had neglected the needs of thousands of people. “Australia’s housing system remains broken and in urgent need of repair and investment,” he said. “We urgently need a commitment to at least 500,000 new social and affordable homes by 2030, so that the thousands of people and families who simply can’t afford private rent aren’t pushed into and unsafe living situations.”
A year later, Frydenberg refused to increase funding for the scheme in the 2020-2021 budget, granting the scheme the same $1.6 billion as the previous two budgets. In this year’s edition, the need was finally moved, with an extra $124 million added to the scheme. This is particularly the case with indigenous housing, as the $237 million invested in 2020 represents the highest point, with the funding down to $110 million by 2023.
But as the problem grows, the funding is actually set to decrease in the coming years. As Kate Colvin, a spokesperson for the Everybody’s Home campaign put it, “… social housing investment is trending down. With skyrocketing rents in regional areas, less than 1% rental vacancies, and high unemployment, this is a huge missed opportunity to deliver homes and jobs to families.”
As The Guardian asked, “Australia’s housing is one the most unaffordable in the world, so how is the Coalition going to fix it?”
This morning, we know the answer.
This article was originally published on The Big Smoke.
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Yep, that’s how the LNP “fixes” things. They say it’s fixed without actually doing anything that is helpful.
I was taught many years ago, so much of the nation’s wealth being invested in housing was not good for the country or economy. It diverts money needed for investing in all other areas. money that would go into shares, industry.
Was I taught the wrong thing? Maybe all money tied up in housing is OK? if so, where does the money come from to invest in our nation’s future? Where do the jobs come from?