Property Leaders Divided Over Coalition’s Housing Solution

While developers continue to endure rising costs and longer approval times, the Federal Opposition is betting big on infrastructure funding to break Australia’s housing deadlock. The Coalition’s strategy to solve the housing crisis is anchored by a $5-billion infrastructure fund aimed at delivering 500,000 new homes across the nation. The Shadow Minister for Housing, Michael Sukkar, outlined the Opposition’s four-pillar approach, which focuses on home deposit assistance, finance accessibility, supply expansion, and regulatory reform, at an Australian Property Developers Association event in Melbourne this month. “The truth is, over the past two-and-a-half years, we’ve seen record levels of migration not met by record levels of supply in new housing,” Sukkar said. “On virtually every single metric, we’ve seen housing going backwards, whether it’s starts, completions, approvals, or rents, which have gone up by 25 per cent over that period.” The centrepiece Housing Infrastructure Program would provide competitive funding to councils, private consortia and land developers for essential infrastructure including water, sewerage, telecommunications, and access roads, Sukkar said. He told the event the program would “unashamedly” target greenfield sites where state governments are “artificially constraining supply of new land”. “Our analysis shows that a $5-billion fund will deliver at the minimum 500,000 new homes above and beyond what would be built otherwise,” Sukkar said. “The purpose of the fund is not to fund business-as-usual infrastructure, but to fund those projects that are currently being held back.” Resimax founder Ozzie Kheir says the Coalition’s $5-billion infrastructure fund, with its “use-it-or-lose-it’ provision, offers a much-needed solution by incentivising swift action. “The pivot from the Labor government to infill development and apartments has not worked,” Kheir tells The Urban Developer . “Building approvals and new dwelling commencements continue to trend down to historic lows.” Despite his concern that past and ongoing decisions may mean the “damage has already been done”, Kheir says easing the regulatory burden and accelerating the delivery of critical infrastructure “promises a more streamlined and efficient path to increasing housing stock”. A 10-year freeze on the National Construction Code is on the cards under a Coalition government. That, Sukkar said, would reduce by $30,000 costs the code currently adds to an entry-level home. Kheir says this shows the Coalition “aiming to provide certainty and reduce unnecessary complexity, which has been driving up costs and stalling development”. The Coalition plan recommits to allowing first home buyers early access to $50,000 of their superannuation for housing deposits. Buyers must recontribute funds when the property is sold. It’s a polarising strategy that is markedly different to the current government’s policy. “If you enter retirement owning your own home, your retirement outcomes are infinitely better than if you don’t,” Sukkar told the event. ▲ Michael Sukkar speaking at the Australian Property Developers Association lunch in Melbourne. Prop Culture property advocates Tabitha Robb and Sam Davenport are cautious about this superannuation measure. “The fact it needs to be paid back into your super once the property sells reinstates the importance of buying property for capital growth,” they said. “If buyers are using this concession in conjunction with any other government incentives to buy new or off the plan property, they are unlikely to be in a position where they have accumulated enough capital growth.” The policy package includes a review of the current 3 per cent serviceability buffer requirement for home loans which, Sukkar says. is “locking a huge number of people out” of the market. Jon Ellis, founder of The Move project marketers and mortgage brokers, supports the initiative. “While we’re an indebted nation, delinquency rates are very low, so a review of borrowing limits would certainly assist first home buyer access,” he says. Ellis, however, has concerns about the policy’s urban focus. “While it’s great to see the Opposition prioritise housing development as a key election platform, the policy is lacking when it comes to well-located, more dense housing in inner and middle ring areas where people want to live.” The Opposition also pledged to enhance the Home Guarantee Scheme, enabling first-home buyers to purchase with a 5 per cent deposit through government guarantees. Robb and Davenport point out the scheme’s effectiveness, citing a 20 per cent increase in uptake during 2023-2024 compared to the previous year. ▲ Mixed response (clockwise from top left): Ozzie Kheir, Sam Davenport, Jon Ellis and Tabitha Robb. The policy announcements come as fresh data shows construction costs continue to rise across Australia. CoreLogic’s latest Cordell Construction Cost Index revealed a 1 per cent increase in building costs over the third quarter , double the previous quarter’s rise. CoreLogic economist Kaytlin Ezzy says these increases could jeopardise national housing targets, and that “approximately 176,000 dwellings were completed in the year to June—26.6 per cent below the 240,000 annually needed”. These cost pressures are particularly evident in Queensland, which recorded the highest quarterly increase of 1.1 per cent. Greystar Australia managing director Matt Woodland says these broader challenges facing the sector need to be addressed for there to be hope the targets can be met. “The major barrier to boosting supply is how expensive it is to build in Australia, with material increases in land costs, construction costs and interest rates, as well as increasingly protracted planning timeframes,” Woodland says. “So, we welcome any measures that can help to drive planning efficiencies, bring construction costs down, and encourage capital investment.” Woodland highlighted specific challenges in different states, noting that cost increases are “more acutely felt in states like Queensland and NSW”. The debate around construction innovation and costs has intensified with the recent announcement of the Federal Government’s $900-million National Productivity Fund . ▲ Greystar Australia managing director Matt Woodland. Building 4.0 CRC chief Professor Mathew Aitchison identified productivity as the core issue facing the sector. “The cost problem plaguing the sector’s low numbers is actually a productivity problem, which is actually an innovation problem,” he tells The Urban Developer . “We need to find new ways to do more, with less.” Aitchison advocates for modern methods of construction and suggests they could “conservatively reduce costs and timeframes by 20 per cent”. He argues that traditional building methods and investment barriers have contributed to “a massive market failure and declining productivity that began over 50 years ago”. Industry leaders we spoke to also highlighted other market challenges the policy needs to address. Robb and Davenport want broader reform of first home buyer assistance. “We definitely think more assistance should be given to first home buyers buying existing property, not just new and off the plan,” they say. “And we believe the Stamp Duty exemption should be raised to $700,000, and the concessions should then be $700,000 to $900,000.” Woodland believes “international capital should be encouraged to deliver housing supply” which he feels is “currently not the case given the punitive tax rate versus other property classes”. “With the bulk of capital investment in build-to-rent coming from international capital, taxing build-to-rent at double the rate of all other real estate classes provides a further barrier to supply,” he says. Ellis, too, is against restrictions on foreign investment. “Any policy that seeks to reduce foreign investment in Australian housing is a negative step,” Ellis says. “It only serves to reduce the ability to supply multi-residential housing and limit rental stock.” ▲ Building 4.0 CRC chief executive officer Professor Mathew Aitchison. The Housing Infrastructure Program is expected to work well in Victoria, with Sukkar citing opportunities due to the state’s topography and population growth patterns. Kheir would like to see “greater collaboration between government and industry to address Victoria’s housing crisis, one that prioritises greenfield development and unlocks the housing stock that Victoria so urgently requires”. Sukkar also wants alignment of migration intake with housing supply, with the need to match population growth with what industry can deliver because “housing is the most important social infrastructure in this country”. The Opposition says it will release additional housing policy details in the lead up to the federal election, which must be held on or before September 27 of next year. The success of these measures will largely depend on their implementation and the cooperation of state and local governments in facilitating development processes. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

Property Leaders Divided Over Coalition’s Housing Solution

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