Written by David Lovato – CPC Development Lending Solutions
Australia’s housing supply crisis is set to worsen with the National Housing Finance and Investment Corporation expecting a shortfall of 106,000 homes by 2027 across the country.
The NHFIC’s State of the Nation’s Housing 2022-2023 report said Australia’s population growth had rebounded more strongly than expected since the international border reopened in early 2022. That, combined with soaring construction costs and higher interest rates, had resulted in the projected deficit as supply failed to keep pace with demand.
The report also highlighted a collapse in the construction of medium-density dwellings (such as apartments and townhouses) over the five years to 2026-27, with net additions projected to be 57,000 a year on average. That’s around 40% less than the levels seen in the late 2010s.
Housing Industry Association chief economist Tim Reardon said the government was likely to fall well short of its goal of building a million homes across five years.
“Every state and territory needs to take action to attract more investment in the housing sector to improve the supply of new homes,” he said.
With this in mind, what are some of the state government incentives currently available in New South Wales, Victoria, and Queensland which can help developers break ground on their projects?
New South Wales
- Low Rise Medium Density Housing Code: The code allows property developers to build dual occupancies, manor houses and terraces without the need for a development application, subject to meeting specific design standards. Fast-tracking development approval via the code can potentially save developers up to $15,000 when compared to the costs of a standard application.
- Land tax discount for build-to-rent developments: The land tax concession is designed to support the development of new build-to-rent projects in NSW by reducing the tax burden on developers. Eligible developments can qualify for a 50% reduction in land tax for up to 20 years.
- The Community Housing Innovation Fund: This $225 million fund provides financial assistance to eligible community housing providers for innovative projects that increase the supply of affordable housing across NSW.
- The Big Housing Build: The BHB is investing $5.3 billion in social housing and aims to deliver over 12,000 new dwellings across metropolitan and regional Victoria. The BHB also includes funding for planning reforms that aim to improve housing supply.
- Land tax discount for build-to-rent developments: Eligible BTR developments get a 50% reduction on land tax for up to 30 years. They are also exempt from any absentee owner surcharge in respect of that land during that time.
- The Housing Infrastructure Fund: This $2 billion fund provides subsidies, one-off capital grants and other support to encourage developers, builders and other investors to build 5,600 social and affordable home commencements across Queensland by 30 June 2027.
- Land tax discount for build-to-rent developments: From 1 July 2023, eligible BTR developments that feature at least 10% affordable housing can qualify for:
- A 50% discount on land tax payable for up to 20 years
- A full exemption for the 2% foreign investor land tax surcharge for up to 20 years
- A full exemption from the additional foreign acquirer duty for the future transfer of a BTR site.