The Labor government and Greens have been fighting it out in Australia’s parliament for the past six months over the Housing Australia Super Fund. And while the tussle might not have caught your eye, the results might make a difference for people looking to enter, or climb, the property market.
Explainer: Housing Australia Future Fund
In Australia, there aren’t enough homes. Lack of supply is one of the key factors driving up house prices and rents, whether it be for a purchase or a rental. Over the past two decades (and longer), there hasn’t been enough investment in building new homes to meet demand.
The new Housing Australia Future Fund (HAFF) aims to create ongoing finances to build social and affordable rental homes. As the plan currently stands, in the upcoming five years, 30,000 reasonably priced rental homes are to be constructed.
The concept is for the government to invest $10 billion in the stock market, with the earnings funding new construction. More residences are created after reinvesting future rental income and market gains in stocks and property prices. OK so far.
But what will this do to the real estate market? What will real estate investors think about the government muscling in? Will first-time homebuyers get any benefits? And, with the money invested in shares, what happens if there’s a stock market crash?
Taking the plunge
The stock market: We see the ups and downs every night on the news. And if there is a big fall, the $10 billion will be worth less. There won’t be any new homes built, critics have argued, if the project is a failure. Ouch.
In response, the government added a promise that at least $500 million would be spent annually, and everyone exhaled. Plus, the market usually goes up. Right?
The HAFF has been criticised by some as being difficult and dangerous. Many groups, including the Australian Greens, can’t work out why governments don’t simply construct social housing as they used to. The government says that’s not an ongoing solution. The Coalition immediately voiced opposition to the measure and withdrew from the discussion.
Who is helped by the HAFF?
You’ll be lucky if you can get your hands on one of these brand-new homes. Priority will be given to those with “acute housing needs”. This sounds fair, however industry experts predict that we might need 650,000 new dwellings in the next 5 years due to changes in the economy and population. The promised 30,000 dwellings are a drop in this ocean of demand; more than 20 times the government’s plan.
Owners of existing properties – and especially investors – are at an advantage. Higher prices usually result from greater demand. If there’s more competition for a home, owners can charge more. A little bit more supply on the market might relieve some of the pressure on more affordable homes, allowing first-time buyers to gain entry, but finding a place to rent or buy isn’t going to be any simpler. We still simply don’t have enough places for people to live.
Ask the experts
Don’t let the state of the market and lack of housing get you down. People are still buying properties, and it is still possible to find your dream house.
At Mortgage Broker Sydney, we value the personal touch. We’re committed to helping Sydney residents find their own home, and we enjoy working one-on-one with our customers.
We can help you untangle the market and understand your choices. You won’t be charged anything for using our service (although regular fees and charges from lenders will still apply). Let our mortgage brokers assist you in determining your financial situation and locating the right loan for your needs.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!