On 25 November UDIA President Maxwell Shiffman attended the Treasurer’s Investor Roundtable on Housing investment in Sydney. During the roundtable UDIA raised that:
- to successfully close the affordable housing gap, we will need to harness private developer capacity, and that an NRAS 2.0 should be considered; and
- part of that solution is incentivising private affordable housing/BTR. Incentivising the rental gap means the Future Fund can boost build to 21,000 dwellings a year off the Future Fund’s interest alone.
Importantly, there was clear recognition that we can’t begin to address housing affordability without boosting supply.
The Federal Government intends to use the National Housing Accord and the Future Fund to bring all stakeholders together on a solution. Several additional meetings of the roundtable are planned in the coming year.
More on UDIA National on the separate blog here.
Over the last three months we have also prepared two National Policy Papers – “Growing Affordable Housing” and driving “Build to Rent” – which provide the framework on how to incentivise industry to deliver Affordable Housing and policies to get the Housing Accord mobilised.
Each year, the UDIA National Board and State CEOs aim to spend a day in Canberra providing briefings in Parliament House. On 29 November we attended Parliament to meet with key Cabinet Ministers and ministerial advisors, including staff from the Prime Minister and Treasurer’s office, from the Minister for Housing & Homeless, and the Minister for Skills & Training, Minister for Environment and Water, and Minister for Immigration, Citizenship & Multicultural Affairs.
In relation to our seven meetings with Key Ministerial Portfolios, we made the following points:
Boosting Housing Supply, Infrastructure, Skilled Workers and Manufacturing:
- The development industry’s role as an engine room for jobs and the economy is in jeopardy by the emergence of perilously low forward-pipeline of new housing supply.
- This is being made worse by rising inflation and interest rates, with significant increases in many basic building costs (by up to 30-40% in the past 12 months), and with skilled labour shortages undermining capacity and productivity.
- Shortages of land for new dwellings drives up prices and ordinary Australians are forced to rent for longer, at higher rates, inevitably pushing more into social and affordable housing that suffers the same scarcity.
- Affordability issues in regional/urban areas are largely the result of a chronic lack of development-ready land. The causes are well known: a lack of enabling/major infrastructure, insufficient zoned land, clogged approval systems.
- Government needs to implement productivity enhancing initiatives:
- Boosting housing supply and infrastructure to create development-ready pipelines has the greatest impact on housing access – UDIA is developing the Development Pipeline Monitor with NHFIC to target, monitor and help incentivise housing supply.
- Fast tracking skilled workers through training and migration will ensure there is enough labour to reduce delays and bolster capacity to match housing supply to demand.
- Onshoring manufacturing and ensuring there is industrial land for manufacturing will reduce vulnerability of the supply chain and bring down costs of raw materials for housing supply.
Harnessing Private Industry to grow Affordable Housing and Build to Rent:
- The housing gap is widening:
- Current shortfalls circa 200,000 for at-market, 173,000 for affordable, 102,883 for social housing.
- We need 45,000 affordable and social houses each year over the next 20 years (NHFIC Review 2021).
- By 2025 need another 20,000 at-market dwellings p.a. (NHFIC) above 200,000 needed each year.
- Government and CHPs currently only make 8,500 affordable and social houses each year – The Accord and Future Fund might bring that up to 19,000 per year. The gap needs private market intervention. Government/CHPs can close gap using private industry’s capability/capital to quickly build housing at scale:
- Australia needs funding incentives that cover the rental gap and harness the private market’s ability to deliver at-scale affordable/social housing and BTR housing (broadly similar to the previous NRAS scheme).
- Future Fund could be utilised to incentivise delivery of approximately 21,000 social & affordable houses year on year, substantially more new dwellings than a direct development approach could facilitate.
The Ministerial meetings raised the following issues:
- Government is currently engaged with the market on affordable BtR with the Investor Roundtable – Great superfunds are prepared to commit investment funds but only if they can get the returns and only if the development market can make if feasible for development.
- UDIA National Policies for BtR require equalisation of regulations and taxes with Build to Sell – The Federal Government needs to resolve MIT and GST, States need to deliver 50% Land Tax (NSW has done this) and better planning rules for BTR.
- UDIA National Policy for Affordable Housing is any organisation delivering affordable housing should be given the same tax incentives as a Community Housing Provider – they create the same outcome. A simple practical way to achieve the same outcome is re-instating a next generation NRAS to fund the rental gap on affordable housing.
- Government should use the National Housing and Homelessness Agreement (NHHA) to drive greater partnering/productivity with the States. UDIA National have worked with the Federal Productivity Commission on this and NHFIC on several policy fronts.
- The Federal Government should get more value for their infrastructure spend on city shaping projects. They should require States to integrate city planning and deliver some of these outcomes upfront, to ensure we know upfront what the city is meant to look like and how we should plan for its development eg: where is the affordable housing on the stations they are jointly delivering in the Airport Metro line?
- Prime Minister’s Office, Minister for Housing’s office and the Minister for Environment are keen to hear more about UDIA’s Development Pipeline Monitor (UDPM) to provide a way for Government to identify development ready supply, monitor barriers such as a lack of enabling infrastructure/planning and support incentives that solve core housing supply problems across the spectrum.
UDIA National welcomes the ongoing, constructive dialogue with the Federal Government and looks forward to working on these major challenges into 2023.