Prime Minister Anthony Albanese's Labor party continues to roll out the housing initiatives as the year wraps up.
In its Mid-Year Economic and Fiscal Outlook, released on Wednesday, Albanese's camp announced a further $10 billion investment to support the construction of new homes over the next eight years. The funding forms part of Labor’s broader strategy to address the housing shortage and improve pathways into home ownership, particularly for first-time buyers.
The plan entails building 100,000 new homes, starting in financial year 2026 to 2027, under the First Home Supply Program. First-time homebuyers could start moving in as soon as fiscal year 2027 to 2028, according to the budget.
"The Government is making more homes available for first homebuyers so that more Australians have the opportunity to enter into home ownership," budget documents read. "The Government will partner with states and territories and industry to unlock more housing supply and make it easier for first homebuyers to own a home of their own. The Government will work with states and territories and industry to identify land that is vacant or underutilised."
The package consists of $2 billion allocated through direct grants and $8 billion provided as low-interest loans, while state and territory governments are expected to add an additional $2 billion through matching contributions.
The plan also forms part of Albanese's broader 2023 agenda, which set out to build 1.2 million new homes nationwide by 2029 under the National Housing Accord. But data on the nation's latest building approvals suggest that Australia is falling short.
Building approvals nationwide fell by 6.4% in October, month-over-month. Crucially, these figures track approvals, not completed homes. Many approved projects may never be finished. Fewer approvals today mean fewer homes tomorrow, deepening Australia’s housing crisis.
The $10 billion pumped into the First Home Supply Program is meant to help the housing shortage. But not all market players remain sceptical about its effectiveness.
"Like the rest of the government's programs, it just won't work," Darren Coff, managing director at Investure, told Australian Broker.
"The government needs to work with developers; they need to work with builders and everything to try to incentivize the private industry to improve infrastructure," he said. "Let people who know how to develop, develop. Give them the mechanism to save money. Don't reverse it. We could save another $130,000 per unit if the government worked with us to reduce the cost, instead of investing $10 billion, or whatever they're going to do. That money is just going to get wasted."
Queensland-based Coff added that government incentives like the First Home Supply Program will likely also "create a problem with trades," arguing it may drive up costs in an economy already grappling with inflationary pressures.
"What the government does really well is overpay under-skilled people," he said. "So you're going to have all these trades saying, why should I go and work with the private industry when they're going to pay me $10 to do this job. And the government is going to give me $20 to do the same or less work. And they give me 18% super. And they give me this, and that. They're going to create a vacuum of trades in the market, which is going to artificially inflate the cost of trades, which is going to increase the cost of housing."
In October, the government expanded access to its Home Guarantee Scheme, commonly known as the 5% deposit scheme, in an effort to lower the barriers to entry in Australia's housing market. But critics argue that the program is doing little to address the underlying housing shortage, while at the same time driving up prices at the lower end of the market.
Then in December, the government launched its Help To Buy scheme. But like the 5% deposit scheme, pundits have voiced concern that the scheme doesn't create more infrastructure. Instead it adds more momentum and competition in an already tight marketplace.
Still, not all market players are convinced that the government initiatives are a step in the wrong direction.
"I think it's a good start. It's better than nothing," said Adam Bradley, founder and director at Emerge Finance. But I guess it depends on how the plan is utilized and how the government is doing it."
