The Greens have put forward a proposal urging the federal government to establish a public property developer aimed at building 360,000 homes over the next five years, realestate.com reported.
The initiative is designed to offer below-market prices for buying and renting homes, directly addressing Australia’s acute housing affordability issues.
According to analysis from the Parliamentary Budget Office (PBO), the plan could lead to substantial financial savings for Australians participating in the program. Renters participating in the program might save an average of $5,200 annually, equating to a 19% discount on current market rents. For first-home buyers participating in the program, the potential savings could be around $260,000 off average market prices, presenting a significant relief amidst soaring property costs.
Renters might save an average of $5,200 annually, equating to a 19% discount on current market rents. For first-home buyers, the potential savings could be around $260,000 off average market prices, presenting a significant relief amidst soaring property costs.
Outlined by Max Chandler-Mather, Greens spokesperson for housing and homelessness, the plan is set to cost the federal budget an additional $27.9 billion over 10 years on an underlying cash basis, realestate.com.au reported. However, it’s projected to decrease the budget’s headline cash balance by $285bn over the same period once the costs of land and construction, and the sale of homes are included.”
However, it’s projected to enhance the government’s balance sheet by $285bn over the same period through the sale and rental income of these homes.
Chandler-Mather emphasised the shift from tax incentives for property investors to a direct investment in affordable housing construction.
“The Greens will scrap the tax handouts for property investors and invest billions in building hundreds of thousands of good quality homes to be sold and rented at prices people can actually afford,” he said.
The proposal has sparked a debate on the role of the government in direct housing construction to compete with the private sector.
With housing construction facing challenges, some experts, like PropTrack director of economic research Cameron Kusher, see potential merits in a more hands-on governmental approach. Kusher compares the current situation to post-WWII efforts that boosted homeownership rates, suggesting that while the proposal is ambitious, it could face significant hurdles in execution.
Highlighting Singapore’s success in government-led housing projects, he acknowledged the financial burdens such a plan would impose but also pointed out the efficiency and economic stability it could bring, especially during periods of high material costs and economic downturns.
“One of the benefits of the federal government funding and developing new housing is that in times like now when material costs are very high and it’s hard for developers to stack up new development, the government could step up and build during those periods,” Kusher said. “The government could also finance a lot cheaper than a private sector developer can.”
However, he remained cautious about declaring it a definitive solution to Australia’s housing challenges.
The proposal comes at a time when housing affordability is a hot-button issue in Australian politics.
The Greens have been vocal critics of current government policies, advocating for changes to negative gearing and capital gains tax benefits for property investors.
Their stance on housing policy, including opposition to the government’s Help to Buy scheme, underscores the party's commitment to addressing the housing crisis as a central theme in their campaign leading up to the next federal election, realestate.com reported.
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