Jim Chalmers delivers a national housing agreement to build 1 million homes

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A national plan to build 1 million new homes by the end of the decade will be announced in the federal budget as part of a landmark agreement between governments, investors and the construction industry.

Treasurer, Jim Chalmers, will announce the national housing deal during Tuesday’s budget, which will include a goal to build 1 million “well located” and energy-efficient homes in five years, starting in 2024. .

The budget will include $ 350 million in additional federal funding to build 10,000 affordable homes over the five-year period, while state and territorial governments have pledged to build up to 10,000.

Chalmers said this was on top of the $ 10 billion Housing Australia Future Fund promised by Labor ahead of the May election to build 30,000 new affordable social housing properties over five years.

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“We want more Australians to know about decent housing safety and more Australians to realize the aspiration for home ownership,” he said in a joint statement with Housing Minister Julie Collins.

“It is more important than ever to work together to ensure that there is an adequate supply of affordable housing where it is needed, close to jobs, transport and other services.”

Chalmers said the deal, signed by federal, state and local governments, as well as institutional investors – including pension funds – and the residential development, building and construction sectors, acknowledged that most of the supply housing “must come from the market”.

The government, he said, will play a “key role in enabling and initiating investments”.

“Compared to comparable countries, Australia has a low level of institutional investment in housing,” the agreement reads.

“At the same time, we have the third largest pool of capital in the world in our social security system, which is hungry for investments that will provide long-term stable returns for the benefit of members.”

The Treasurer’s Investors Roundtable, a forum established earlier this month involving the government, CEOs of the nation’s four big banks, and the heads of the largest pension and investment funds, will meet in November to discuss private investment. In housing.

The agreement also describes short- and long-term actions to address supply problems, including improving zoning and zoning regulations, and releasing state-owned and Commonwealth-owned land for affordable, social housing.

According to the Australian Bureau of Statistics, around 985,000 new homes were built in the five years to March 2022, although most were completed before 2018-19.

Since then, home completion rates have declined, largely due to rising labor and material costs, with an estimated 174,000 homes built in 2021-22.

The Treasury expects there will be around 180,000 housing completions on average over the next three financial years, which is consistent with estimates from Master Builders Australia and the Housing Industry Association.

Last month, the Productivity Commission described the private rental market as the “epicenter” of the nation’s housing affordability problem and recommended that state and territorial governments commit to set targets for the new housing offer. accommodations.

In 2020, the Victorian government announced a $ 5.3 billion “large housing construction” to finance 12,000 new affordable social homes over four years.

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Earlier this year, it announced a developer levy to fund 1,700 new, affordable social homes each year after the big construction ended, but it was demolished just days after opposition from industry groups.

It also hopes to increase home ownership in the state by tripling the size of its Victorian Homebuyer Fund to $ 1.1 billion. The fund allows homebuyers to buy on a 5% deposit, with the government providing up to 25% of the home purchase price.

Homebuyers can then buy the government’s share at market value over time, with payments reinvested to help others enter the housing market.

The Queensland government, meanwhile, recently announced $ 2 billion for the delivery of 13,000 affordable social homes by 2027. It is understood that the announcement is separate from its commitment under the agreement.

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