The 2024-25 Federal Budget has unveiled a series of initiatives aimed at bolstering housing supply and supporting the construction sector.
The government’s strategy includes collaborations with states, territories, and local governments to introduce reforms enhancing housing supply and affordability as part of the National Housing Accord over the next six months.
Key measures to incentivise housing supply include reducing the withholding tax rate for eligible managed investment trust fund payments attributed to newly constructed properties.
Additionally, the capital works tax deduction (depreciation) rate for newly constructed build-to-rent developments will increase from 2.5 per cent to 4 per cent per year, potentially unlocking 150,000 new rental properties over the next decade.
The National Housing Finance and Investment Corporation’s liability cap will be raised by $2 billion, facilitating more lending to community housing providers for social and affordable housing projects.
Furthermore, $350 million over five years is committed under the National Housing Accord to support the delivery of 10,000 affordable homes by states and territories.
The government is also in discussions with states and territories to make an additional 300,000 TAFE and vocational training places fee-free, focusing on industries like construction to develop a skilled workforce.
The Property Council of Australia has welcomed the increased funding to boost Australia’s construction workforce, acknowledging it as a positive initial step.
However, the council emphasised the need for further immediate labour supply to meet the nation’s ambitious housing targets.
“Only 1.8 per cent of our skilled migrant intake has been comprised of new construction workers over the past two decades, falling significantly short of what we need.
“As we intelligently manage down the overall migrant intake, the government needs to prioritise a greater percentage of skilled migrants entering Australia with construction qualifications to meet our housing demands,” said Property Council Group Executive Policy and Advocacy Matthew Kandelaars.
The Independent Tertiary Education Council Australia (ITECA) has also expressed support for the government’s funding announcement, particularly the $88.8 million commitment to fee-free places in the building and construction sector.
ITECA believes this investment will help address skills shortages in the industry, ultimately benefiting project delivery across the country.
The Federal Budget’s focus on tax incentives, funding for social housing, workforce training, and planning reforms reflects a comprehensive approach to addressing housing affordability and supply constraints.
The government’s efforts, coupled with positive industry and stakeholder responses, indicate a collective commitment to strengthening the housing market and the construction sector in the coming years.
