Housing and cost of living: the Federal Budget in brief

Housing and Cost of Living

Housing and Cost of Living: The Federal Budget in Brief.

The Federal Government has introduced a range of measures aimed at boosting housing supply, moderating demand, and addressing the cost of living in its 2024-25 Budget.

The Federal Government has delivered a range of measures aimed at boosting housing supply, moderating demand, and addressing the cost of living in its 2024-25 Budget.

Housing supply:

The Budget allocates $6.2 billion to housing initiatives, building upon the announcements of 2023-24.

This includes $1 billion to states and territories to facilitate new housing projects, encompassing essential services such as water, power, sewerage, and roads.

In an effort to expedite housing construction, the Federal Government has earmarked $88.8 million for 20,000 new fee-free TAFE places, with expanded access to pre-apprenticeship programs tailored to the construction sector.

To bolster rental accommodation, foreign investors purchasing established Build-to-Rent developments will benefit from a reduced foreign investment fee, provided the property remains operational as a Build-to-Rent development.

Moderating demand:

Strong population growth has been a significant driver of housing demand, consistently exerting upward pressure on housing prices.

The Federal Government anticipates a decline in migration over the next few years, which should alleviate demand pressures.

Following a record net overseas migration intake of 528,000 in 2022-23, Treasury forecasts a decrease to 395,000 in 2023-24, further dropping to 260,000 in 2024-25 and 255,000 the subsequent financial year.

The permanent migration program will be capped at 185,000 places in 2024-25, with 132,200 places designated to address Australia’s long-term skill needs.

The government intends to establish caps for the number of international students enrolled in Australian universities. Additionally, to augment student accommodation and alleviate pressure on the private rental market, the Government will collaborate with the higher education sector to introduce regulations mandating universities to expand their supply of student accommodation.

Interest rates and inflation:

Treasurer Jim Chalmers predicts that inflation could potentially return to the Reserve Bank of Australia’s target by the end of 2024. This could prompt interest rate cuts, offering potential benefits to mortgage holders and prospective home buyers.

Cost of living:

There are a range of measures addressing the rising cost of living in the Budget:

Homelessness and social housing:

The current state of the property market has led to an increasing rate of homelessness and a heightened demand for social housing.

The Budget will allocate $1 billion towards crisis and transitional accommodation for women, children fleeing domestic violence, and youth under the National Housing Infrastructure Facility.

A new $9.3 billion five-year National Agreement on Social Housing and Homelessness has been unveiled, aiming to empower states and territories to address homelessness, offer crisis support, and construct and refurbish social housing. This includes a doubling of Commonwealth homelessness funding to $400 million annually, matched by states and territories.

Additionally, the Budget will provide an extra $1.9 billion in concessional loans to community housing providers and other charities, supporting the delivery of new social and affordable homes through the Housing Australia Future Fund and National Housing Accord.