OPINION
Australia’s housing crisis isn’t easing… it’s deepening.
The latest ABS figures show total dwelling commencements have fallen 11.2 per cent in the March quarter, while apartment commencements have slumped almost 20 per cent in just three months.
Apartments are a major contributor to the National Housing Accord target with these projects expected to improve affordability and expand rental supply.
Urban Development Institute of Australia (UDIA) national president Oscar Stanley. Picture: Supplied
Yet, at precisely the moment new housing supply is faltering, the Federal Government has removed one of the key sources of investment that gets projects built.
The decision to prohibit self-managed super funds (SMSFs) from investing in residential property through Limited Recourse Borrowing Arrangements demonstrates a fundamental misunderstanding of how new housing is delivered.
SMSF investors aren’t simply another buyer. They are often the early purchasers whose commitments allow developers to secure bank finance and commence construction.
Without sufficient pre-sales, projects don’t simply lose investor sales, they are delayed or shelved altogether.
Industry evidence gathered by UDIA indicates SMSFs currently support between 25 and
50 per cent of qualifying pre-sales, with many developments therefore relying on SMSFs
to commence construction.
The multiplier effect is significant. Remove those purchasers and the impact extends far beyond the initial sales.
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Many property developments rely on SMSFs to commence construction. Picture: Getty
Based on evidence provided by developers across Australia, up to 40,000 new homes could be delayed beyond the National Housing Accord period (1 July 2024 – 30 June 2029) or not proceed at all because projects fail to secure finance or become commercially unviable.
That should concern every Australian and certainly a concern in Canberra.
The Commonwealth has committed $10 billion through the Housing Australia Future Fund to increase housing supply.
Yet one Government policy designed to create much needed homes risks totally offsetting another by removing the private mum and dad investment needed to unlock construction.
The solution is simple. Allow SMSFs to invest in newly constructed housing only. That increases rental supply, supports project feasibility and helps Australia achieve, not undermine, its Housing Accord commitments.
Every housing policy should be judged by one question – will it build more homes? If the answer is no, it is the wrong policy
Oscar Stanley is the national president of UDIA.
