The despair caused by Australia’s housing crisis was evident this week as politicians traded barbs about a new construction fund in Canberra while the situation of 2.9 million renters continues to worsen.
Amid near record-low vacancy rates nationwide, rents have soared again in March, with prices up in Sydney (2.2 per cent), Brisbane (1.8 per cent) and Melbourne (1.9 per cent), according to figures published by analysis firm My Housing Market on Saturday morning.
Veteran housing economist Andrew Wilson, who authored the report, said that despite double-digit gains over the past year, rent growth has accelerated during early 2023.
“This is just going to keep fuelling itself until we get significant solutions,” Mr Wilson said.
Even if the Housing Future Fund makes its way through the Senate, Dr Wilson warns the first big effort from the federal government to address the housing crisis will only “nibble at the problem”.
“We’re seeing a huge surge in demand for rental properties,” Dr Wilson said. “It’s really hundreds and hundreds of thousands of houses that we need.”
“I don’t think there’s a plan that can work [in the short-term].”
Key plank of housing agenda stalls
The grim assessment comes after the failure of the federal government’s $10 billion housing plan.
The so-called Housing Future Fund would establish an off-budget public investment trust that would direct its returns towards constructing 30,000 social and affordable houses within five years.
But the policy has run into a Senate-shaped roadblock, with the Greens criticising the plan as lacking ambition and calling for an additional $5 billion a year on-budget investment in housing.
“If Labor can find $368 billion for nuclear submarines … then they must be able to find $5 billion a year for public, community and affordable housing,” Greens MP Max Chandler-Mather said.
Negotiations on the fund appear to have stalled after Prime Minister Anthony Albanese told Parliament that the Greens’ demands, which include a national rent freeze, were “absurd”.
“That sort of measure would require us to take over from state and territory governments … one of the things I won’t do is promise absolute pixie dust, because that’s what this is,” he said.
“You cannot have credibility coming in here saying, ‘we don’t think $10 billion is enough, we want $20 billion, therefore we will oppose $10 billion.
“It’s just absurd to vote for zero rather than progress.”
‘Very difficult constraints’
The housing fund, a key election pledge, is unlikely to be legislated when Dr Chalmers delivers his second budget in May.
It will continue to loom large over Mr Albanese’s larger housing agenda, which intends to wield Australia’s multi-trillion dollar retirement system to turbocharge the construction of a million new homes from 2024 to 2029.
Experts say this larger plan, first unveiled in the October budget, is still lacking in key details, and will run into huge economic issues amid an ongoing downturn in the construction sector.
Australian Housing and Urban Research Institute (AHURI) boss Michael Fotheringham says the industry is already struggling to keep up with a massive backlog of housing commencements after COVID-19 as sky-high material costs and a diminished building workforce bite.
It leaves Mr Albanese’s housing agenda facing “very difficult constraints”, Dr Fotheringham said.
“It’s true that we need to do more, but do we even have the capacity to do more?” he queried.
“We don’t currently even have the capacity to construct what’s there, so we’ll have to stretch to meet their million homes target.”
Australia’s ‘generational’ challenge
Dr Fotheringham supports the passage of the Housing Future Fund, saying Australia must “get on with it” because tackling the housing crisis would take a generation, not just half a decade.
“The Future Fund model is a pretty well established one … it’s been quite a successful means of financing national priorities,” he said.
“We need to move away from five-year plans and start talking about 20-year plans,” he said.
“It’s a generational problem, we’ve got 30-plus years of under investment that we need to make up for.”
This would involve longer-scope reforms that build up Australia’s construction workforce and expand supply chains for needed materials so that building would become cheaper, and faster.
Without such an approach, the Albanese Government runs the risk of the housing industry treating its housing agenda like “fantasy”,” Dr Fotheringham said.
He cited the experience of New Zealand, which attempted to build 100,000 homes in four years but only managed about 1500.
“You don’t get industry buy-in when you talk fantasy,” he said.
“Let’s go for achievable goals.”
