Join us tonight for a discussion on the 2022/3 Federal Budget and what it all means for property.
MCG will be on Facebook and LinkedIn live from 7pm:
In this week's episode of the Property Pod, we discuss what comes next for Queensland now that the controversial land tax proposals have been shelved.
The episode will be out tonight.
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1 million new homes
The 2022/3 Federal Budget is expected to announce a plan to build one million new homes.
We'll have to see what the details reveal, but it's surely likely to involve tax concessions for superannuation funds to build affordable housing.
In any case, Australia is set to build around two million new homes over the coming decade, so the real question is how many additional dwellings will be added by the Budget proposals.
At the moment, the government is committing to only 30,000 new public housing dwellings over five years, which barely touches the sides of what is likely to be required.
It's somewhat reminiscent of the Coalition's pledge to add "one million jobs over five years", which was basically the speed at which the economy was adding jobs anyway.
KiwiBuild abject failure
Not so long ago Jacinda Ardern was elected on a 2017 election pledge to build 100,000 affordable homes under the KiwiBuild scheme.
To date the scheme has been an abject failure, delivering a grand total of 1,366 homes after four years - or around 300 or so per annum - while the state housing waiting list has ballooned from 5,000 to 25,000.
The New Zealand Government claims credit for building more state housing, but neglects to mention that it's demolished more homes than it's actually built.
193 government homes have been built this year to date, but over 200 homes have also been demolished since January, reported The Australian a month ago.
Australia's challenge
Realistically, Australia's super funds exist to generate the best possible risk-adjusted returns, which stands directly at odds with the provision of affordable housing.
So although the government will be looking at "creative" ways to provide new homes through institutional investors, I wouldn't be holding my breath for anything which actually moves the needle on housing supply.
Meanwhile, the number of student applications (and soon grants) is running at around ~45,000 per month, or close to half a million per annum.
Source: Westpac
The Million Programme
Have there been any examples of governments providing affordable housing on a grand scale?
One springs to mind.
Sweden managed it with its remarkable Million Programme between 1965 and 1974, committing to building one million new dwellings at a time when the Swedish population was only around 8 million.
Unfortunately the outcomes weren't always great, with so-termed vulnerable areas being created, and many tenants looking to move out of the monotonous tower blocks as soon as they could afford to do so, to escape the escalating gang crime and poverty.
Still, it does show what can be achieved with a focus, albeit at a substantial cost to the government.
In any case, the Australian government itself launching a major building programme would require very heavy borrowing, which almost certainly isn't on the agenda for Australia...especially after what's happened to UK gilts over the recent past.
