Federal budget 2024: What’s in store for real estate?
With property and housing front and centre of political, social and economic debate so far in 2024, Treasurer Jim Chalmers has delivered his hotly anticipated federal budget for 2024–25 to Parliament.
Walking a fine line between delivering cost-of-living relief without adding to inflation, the Treasurer sought to assure Australians in his 2024-25 budget address that help was on the way for those hardest hit by the current economic climate.
To that end, housing was a major focus, with Chalmers stressing that the government was unlocking funds to enable more homes to be built, while also delivering measures to help with housing pressures right now.
Off the back of a 15 per cent increase to Commonwealth Rent Assistance included in the 2023-24 budget, Chalmers announced the maximum rate would grow by a further 10 per cent for those receiving the benefit. With a price tag of $1.9 billion, he noted that it was the “first back‑to‑back increase to Commonwealth Rent Assistance in more than 30 years”.
The provision of further rental assistance, alongside energy bill relief, are estimated to “directly reduce headline inflation by ½ of a percentage point in 2024-25” - while not adding to broader inflationary pressures.
According to the Treasury, “this could see headline inflation return to the RBA’s target band by the end of 2024, slightly earlier than expected at MYEFO (the mid-year economic and fiscal outlook).”
Many of the housing initiatives – from infrastructure spending to skills training for the construction sector – were framed in light of the government’s goal of building 1.2 million homes over the next five years. It’s a promise that housing bodies are committed to working towards, while acknowledging that current projections see the nation falling short.
Here are the housing-related measures intended to support that goal and other housing pressures contained in the 2024 financial statement:
Homes for Australia
As unveiled by Prime Minister Anthony Albanese last Friday, this year’s budget includes $11.3 billion to address the acute housing shortages facing Australians.
This package, called the Homes for Australia plan, includes $9.3 billion that has already been pledged over five years under the National Agreement on Social Housing and Homelessness, which will be dedicated towards repairing social housing and providing crisis support.
A further $6.2 billion in new investments was added to the plan in the latest budget, bringing the total amount of funding invested in housing since 2022 to $32 billion.
The Homes for Australia plan includes $1 billion for crisis and transitional accommodation for women and children escaping domestic violence, and for youth, pledged as part of the previously announced National Housing Infrastructure Facility.
A further $1 billion has been committed to states and territories to build roads, sewers, water and community infrastructure to support new residential development.
The budget will also deliver $1.9 billion in concessional loans to help community housing providers construct 40,000 social and affordable homes.
Meanwhile, the $2 billion Social Housing Accelerant Payment will fund 4,000 new or refurbished social houses.
Rent assistance
Commonwealth Rent Assistance has been increased by 10 per cent, representing a total investment of $1.9 billion for the federal government.
“Rising rents are another big part of the inflation challenge, and we’re supporting renters who need our help,” said Chalmers.
Since 2022, Commonwealth Rent Assistance has risen by 40 per cent to mirror the steep upward trajectory of prices in the private rental market.
Chalmers noted that the rental assistance boost will provide “much-needed help for young people and renters of all ages doing it tough” amid a swathe of supply and affordability challenges.
Increasing the pipeline of construction workers
The government has earmarked $90.6 million within this year’s budget to boost the construction workforce.
This contribution aims to remove the cost barriers to education and training for construction careers with $88.8 million put towards 20,000 additional Fee-free TAFE training places to increase the pipelines of workers in construction and housing.
It also includes $62.4 million to flow to the states and territories that will provide an additional 15,000 Fee-free TAFE and VET places over two years from 1 January 2025.
Another $26.4 million was pledged to create approximately 5,000 places in pre-apprenticeship programs over the same period.
Within the latest financial statement, the government additionally committed to raising payments for apprentices in priority occupations from $3,000 to $5,000, and hiring incentives for priority occupation employers from $4,000 to $5,000 for 12 months starting from 1 July 2024.
According to the government, “this will provide certainty to apprentices while the Strategic Review of the Apprenticeship Incentive System is underway.”
Within the budget papers, the government stated that eligible Group Training Organisations would be reimbursed for reducing fees to small-to-medium enterprises seeking apprentices in priority sectors such as construction, clean energy and manufacturing.
In delivering their “biggest investment in social and affordable housing in a decade”, the government announced that this investment would help to overcome the liquidity challenges construction firms are facing as a result of the current cyclical downturn in residential building approvals.
(Source : Real Estate Business , Juliet Helmke, Orana Durney-Benson, Sebastian Holloman, Grace Ormsby 14 May 2024)