Industry welcomes expected increase in housing supply

In recognition that housing supply is a growing issue, representatives from the mortgage and property industries have welcomed the passing of the Housing Australia Future Fund Bill.

MFAA CEO Anja Pannek (pictured above left) said that that the peak industry body for the mortgage and finance broking industry “wholeheartedly supports” moves to increase housing supply.

The Housing Australia Future Fund (HAFF) Bill progressed through its second reading to the Committee on Wednesday and passed parliament on Thursday.

CoreLogic economist Kaytlin Ezzy (pictured above right) said that the Bill represented “a step in the right direction” for those most impacted by worsening rental affordability. However, the anticipated increase in housing supply is unlikely to meet growing demand or make a tangible difference to national property values, she says.

The $10 billion Housing Australia Future Fund is expected to support the construction of 20,000 social homes and 10,000 affordable rental homes within its first five years (a total of 30,000 homes). This includes 4,000 homes for women and children impacted by family and domestic violence, or older women at risk of homelessness.

After the Greens and Coalition rejected the policy earlier this year, Prime Minister Anthony Albanese confirmed on September 11 that the $10bn fund had received support to proceed. Importantly, the government has confirmed that an additional $1bn will be invested in the National Housing Infrastructure Facility to support new homes.

In its pre-budget submission to the federal government earlier this year, Pannek said that the MFAA noted that boosting housing supply “must remain a priority”.

The passing of the legislation is a “positive step” towards that, she said.

Acknowledging the role of mortgage and finance brokers in homebuyer decisions, Pannek said that choice and competition would remain essential as people seek financing to purchase new housing as it comes to the market.

“This is the value proposition of our members, who remain committed to assisting their clients to enter the housing market,” Pannek said.

Broker involvement in schemes and grants essential, says MFAA

Pannek also highlighted the importance of broker involvement in government schemes and grants supporting homeownership, including first home buyer grants, government guarantee and shared equity schemes.

According to a NHFIC First Home Loan Deposit Scheme Trends and Insights report for 2021-22, over 70% of loans utilising federal schemes are facilitated by brokers.

“Mortgage brokers must be included in how these schemes are rolled out into the future, to give more Australians access to housing,” Pannek said.

Social housing shortfall expected to persist

Ezzy said that the 30,000 new social and affordable rental homes, combined with the 9,000 new social homes expected to be delivered via the Social Housing Accords, would help to alleviate some of the supply pressures within the social housing sector, while providing increased security for some households most in need.

While the 39,000 homes would help to narrow the social housing shortfall, Ezzy acknowledged that it would not be sufficient to close the gap between supply and demand.

“In June 2022, the Productivity Commission recorded approximately 175,000 households on the waiting list for public housing, with approximately 68,000 identified as having the greatest need for housing,” Ezzy said.

“Given we’ve seen record rent rises, weaker economic conditions and a rising cost of living over the past year, it’s likely the additional supply could be offset by an increased demand for social housing.”  

While the government’s commitment to the National Housing Infrastructure Facility was viewed as positive, Ezzy said that as with the HAFF and Social Housing Accords, it was likely to have a “negligible impact” on the overall housing supply.

Property values likely to be unaffected

Commenting on whether an increase in housing supply as a result of the HAFF would add downward pressure on property values, Ezzy said that given its relatively small size and staggered and targeted nature, it was unlikely to have any noticeable impacts in values overall.

“With record levels of net overseas migration set to continue, demand for housing is expected to grow over the coming years, with NHFIC predicting a housing shortfall of around 175,000 homes by 2027,” Ezzy said.

“While the program will help close some of the gap, additional demand will likely offset any downward pressure the additional supply will provide.”

While the Bill is likely to help to relieve some pressure at the lower end of the rental market, Ezzy said that in order to make a significant impact on growth in the broader rental market, higher volumes would be required.

Housing supply Australia’s biggest issue – NAB CEO

NAB CEO Ross McEwan has previously expressed concern about Australia’s housing shortage. Speaking to ABC senior business correspondent Peter Ryan on August 17, 2023, McEwan referred to housing as the “biggest issue” facing the country.

Visiting Tamworth in regional NSW, McEwan said that feedback from businesses was that they were unable to attract workers because housing and rentals were too hard to find. 

“I’d say it’s the biggest issue that we’ve got across Australia. So the government spending time on it - and it should be I think on simplification of the planning process,” McEwan told Ryan.

In a story published by the Australian Financial Review on June 2, 2023 McEwan expressed concern about Australia’s undersupply of housing, citing it as a “major issue” and warning that without clear moves to increase supply, demand would inevitably “push up prices further and faster”. McEwan also told the publication that a lack of properties had pushed rents up 10.1% in the past year, compared to an annual average rise of 2.1%.

Housing Australia Future Fund

The HAFF Bill will give effect to the government’s 2022 election commitment to establish the $10bn HAFF, from which returns would deliver 30,000 social and affordable homes.

The government has confirmed that returns from the HAFF would also help to address acute housing needs.  This includes:

• $200 million for the repair, maintenance and improvement of housing in remove Indigenous communities.
• $100 million for crisis and transitional housing options for women and children impacted by family and domestic violence and older women at risk of homelessness.
• $30 million to build housing for veterans who are experiencing homelessness or at risk of homelessness.

What impacts do you think the HAFF will have on the mortgage and finance industry, the role of brokers, supply and property values? Share your thoughts in the comments section below.