Political heat ramping up as housing crisis worsens

The federal opposition Liberal Party has sensed blood in the water around the housing crisis, with a major Cabinet reshuffle naming Senator Andrew Bragg as the new Shadow Assistant Minister for Home Ownership.

The New South Wales politician brings a heavyweight financial background to the portfolio as the existing Chair of Economics References Committee and Deputy Chair of Economics Legislation Committee.

Within the Albanese Government Julie Collins is the Minister for Housing and Minister for Homelessness.

This week’s dire building approvals figures, the lowest for 12 years, added fuel to the political fire.

Just 12,850 new dwellings were approved for construction in the first month of 2024, fresh ABS data has shown.

January’s 1 per cent fall was in marked contrast to economists’ forecasts of a 4 per cent increase and has heaped the pressure on the government’s beleaguered plan to build 1.2 million homes in the five years from 2024.

Further highlighting the plight of so many, the national vacancy rate has hit a record low of 0.7 per cent, according to Domain. In Perth and Adelaide, it is as low as 0.3 per cent.

Peter Dutton’s Liberal Party is targeting the rental and housing crisis in a bid to claw back support that slipped after the government revealed changes to the Stage 3 tax cuts that Treasury concluded would leave 84 per cent of taxpayers better off, and comfortably retained the Melbourne seat of Dunkley in a by-election.

Labor government support jumped 3.5 to 53.5 per cent, well ahead of the Coalition on 46.5 per cent (down 3.5 per cent) on a two-party preferred, according to the Roy Morgan survey on Federal voting intention released Tuesday (5 March).

The latest Liberal Party appointment is another sign of the importance housing will play as an election issue in September 2025.

“Andrew’s astute policy mind and advocacy will stand him in good stead for this critical portfolio area for the Coalition under my leadership,” Mr Dutton said.

Michael Sukkar, Shadow Minister for Housing and for Homelessness, said “the Albanese Labor Government fiddled while the housing crisis continues to get worse.”

“Since the election, national median rents have increased by 26 per cent to $580 per week, Australia is experiencing record migration on Labor’s watch, and it has also been confirmed Labor’s 1.2 million homes promise is officially broken, with an estimated 400,000 shortfall.”

“On top of this, Australia has recently seen the weakest quarter of construction in more than a decade, with forecasts showing housing starts will decline even further over the next two years.”

Government policy bogged down

One of the policy planks of the Labor Government’s plans to deliver housing supply relief, the Help to Buy scheme, is currently being held hostage in the Senate by The Greens, who are demanding changes to negative gearing rules.

The government has ruled out negotiation, all too aware of the backlash it suffered when it took such policies to the unsuccessful 2019 federal election.

The Help to Buy scheme would take an equity stake of up to 40 per cent of the purchase price on new and existing homes, later recouping the funding, plus its share of capital gain on the home, when the property is eventually sold.

The Greens on Wednesday (6 March) also revealed it will call on the Federal Government effectively become property developers.

Their plan would involve the government buying and developing 360,000 homes over five years for the public to rent or or buy.

Max Chandler-Mather, housing spokesperson for The Greens told the National Press Club their proposal would “save participating renters an average of $5,200 a year, and participating homebuyers $260,000 on the price of their home”.

Speaking to ABC News, he pinned the housing crisis on private property developers.

“We don’t need more high-end apartments that property developers sell but no-one can afford except for an investor,” he said.

“What we need are homes that people can actually afford, and the way to do that is for the government to build homes where you cut out the profit margin.”

The Institute of Public Affairs (IPA), a non-profit free market public policy think tank, on Monday (4 March) added its traditionally conservative voice to the debate, declaring that record migration and tumbling building approvals were the “recipe for economic disaster”.

Daniel Wild, Deputy Executive Director of the IPA, said its research showed a housing construction shortfall of 200,000 dwellings against the federal government’s target over the next five years, and a net housing supply shortfall of 252,800 dwellings over the six years to 2028.

“Governments at all levels are setting Australia up for an economic and humanitarian disaster, as latest dwelling approvals show we are simply not building enough houses for first home buyers and new migrants alike, despite record intakes,” Mr Wild said.

“(Monday’s) ABS approvals data highlights the real-world consequences of unplanned, record levels of migration and despite repeated warnings, the federal government continues to push the accelerator on migration at the exact same time as the brakes are being slammed on housing approvals”

Recently released IPA research revealed that 2023 was the first year in Australia’s history that more than one million migrants entered the country.

“The current unplanned migration intake is placing immense pressure on housing and our critical infrastructure, and has not solved our worker shortage crisis,” Mr Wild said.

Domain’s February Vacancy Rates Report shows it is hard going for renters right across the country, according to Chief of Research and Economics at Domain, Nicola Powell.

“It’s challenging and I think 0.3 per cent (vacancy rate), that’s needle in a haystack type stuff.

“And we’ve got some of our capital cities with much more extreme conditions, versus other cities that are actually better conditions for tenants — still technically a landlords market — but a higher vacancy rate in Canberra and Darwin sitting at 1.3 per cent.”

Ms Powell said the biggest problem is a shortage of supply, and that sluggishness has been brought into sharp focus by the latest ABS building approvals data.

She added that record low vacancy rates are being driven by ongoing factors like rapid population growth and rising property prices, leaving more renters stuck in the rental market.