Master Builders Australia, the Property Council of Australia and the Real Estate Institute of Australia have today released independent modelling revealing that the overall impact of the Federal Budget will see new home construction go backwards, and higher than anticipated rental inflation.
The modelling finds that over the next four years the Federal Budget will cause:
- New housing supply to fall by over 8,700
- Rents to increase by up to $9 per week
- A reduction in GDP of $864 million
- Construction jobs to fall by more than 3,800.
These outcomes differ from Treasury's results, which forecast a more modest increase in rents of around $2 per week and a net increase in housing supply by 30,000 over ten years, equivalent to 12,000 homes over the next four years.
This modelling by Qaive and Tulipwood was commissioned to understand the full impact of the Federal Budget. What has been revealed has negative implications for builders, aspiring homeowners and renters.
The National Housing Accord target of 1.2 million new homes by the end of 2029 is supported by builders, the Government and the community. The Budget settings are not aligned with the policies that would make this target a reality.
The independent modelling confirms Treasury's result that housing supply will decline as a result of the negative gearing and capital gains tax changes.
The main driver of the difference in the new home building forecasts is the expected impact of the $2 billion Local Infrastructure Fund over the next four years, with the independent modelling forecasting up to 5,300 new homes compared to Treasury's 26,000 new homes.
The modelling finds that Federal Government revenue will increase by $3.23 billion, which is comparable to the increase in the national rent bill of $3.42 billion. On a $600 per week rental, the increase to rents equates to $142 per year in 2026/27, rising to $477 per year in
2029/30.
As the Budget's legislation is considered by Parliament, the associations are calling for the housing policy package to be amended to better support housing supply and to make the Housing Accord target achievable.
A copy of the independent modelling can be found here.
