You’ve probably seen the news – the Albanese government has relaunched its long-stalled housing agenda in a deal with the Greens that will see billions in new money spent on affordable homes.

But will the passage of the Housing Australia Future Fund (HAFF) scheme through the Senate actually drive the nation towards a national cabinet target of 1.2 million new dwellings between 2024 and 2029?

And would that be enough to seriously tackle Australia’s chronic housing crisis, which has become more acute over the past year as the lack of available dwellings pushes up rents?

Those are the questions being asked as politicians iron out the details on what will be the most significant reform from Canberra to national housing policy in more than a decade.

Dr Michael Fotheringham, managing director at the Australian Housing and Urban Research Institute (AHURI) said the future fund deal is undoubtedly a positive step for housing policy.

But he warned the fund is no panacea for a much deeper set of policy problems that are making it increasingly difficult to find affordable housing nationwide, saying industrial and tax reform is still needed.

No quick fix

“It’s taken several decades to dig this hole – we’re not digging our way out of it with one stroke of a pen,” Fotheringham said.

“But while the HAFF itself won’t solve our housing challenges, it is a really important ingredient.

“It’s a fund in perpetuity, which is really significant because Commonwealth investment in housing has been really piecemeal for the last 20 years.”

The $10 billion HAFF will establish an off-budget, public investment trust that will direct returns towards constructing social and affordable houses (about 30,000 within five years).

Concessions handed to the Greens for their support of the fund will see an additional $3 billion spent directly from the budget on social and affordable housing through the National Housing Finance and Investment Corporation and the Social Housing Accelerator payment.

But Dr Chris Martin, a senior research fellow at the University of NSW’s City Futures Research Centre, said the HAFF and additional funds drawn out by the Greens are “well short” of what’s needed to meet demand.

Building bigger and for longer

“We need to be building 30,000 houses per year for about 20 years if we’re to build our social and affordable housing sector to such a size that it could meet all of the current and projected need,” Martin said.

“It needs to be even bigger … about three times as big and for about four times as long.”

Source: Master Builders (click to enlarge).

Housing Minister Julie Collins said on Tuesday that the HAFF would be a “critical part of the puzzle”, but wasn’t the only thing the Albanese government was doing to address the housing crisis.

“We’re incentivising states and territories to do the reforms necessary to get those additional homes,” Collins said.

“We need to do it all and we need to do it all at once.”

Challenging targets

But while the Albanese government has outlined more than $13 billion in funding for housing programs since it took office, it’s still not clear if Australia will be able to build enough homes to meet the national cabinet’s target of 1.2 million homes over five years from July 2024.

Forecasts published by the Master Builders Association (MBA) on Tuesday suggest Australia will fall far short, with only about 874,000 dwellings predicted to start construction over the four years from 2024-25 to 2027-28.

In other words, about 326,000 dwelling starts would be needed in 2028-29 to meet the Albanese government’s target – 64 per cent higher than MBA’s projected five-year average for 2023 to 2028.

The next item on the federal government’s agenda when it comes to housing is a looming housing and homelessness agreement with state governments, which Martin said must outline a bigger agenda.

“It could be looking at how we dampen private sector investment and reduce the number of private sector landlords in order to make more space for the big and growing not-for-profit sector,” Martin said.

Fotheringham said the capacity of the construction industry to lift the production of new dwellings is lacking and must also be addressed.

That means governments will also need to invest in the building industry itself, including through enhanced workforce policies and smoother access to the raw materials needed to build homes.

Experts back tax reforms

But more broadly, Fotheringham warned that Australia still hasn’t addressed underlying policy problems that helped bring about the housing crisis, including tax arrangements such as negative gearing and capital gains discounts, which drove a surge in speculative investment.

“We need a better bipartisan dialogue that’s willing to look at tax,” Fotheringham said.

“We’re fighting the tide on some of this and we need to make some policy reforms there.”

Martin also thinks tax reform needs to make its way back onto the political agenda to dethrone swathes of small private property investors.

He said the prevalence of private landlords across the nation has been a key factor in pushing up prices and making affordable housing more scarce.

“The way we tax – or don’t – the small household sector drives prices up, yields down and has driven some owner-occupiers out,” Martin said.