{"id":177565,"date":"2023-08-20T19:49:51","date_gmt":"2023-08-20T09:49:51","guid":{"rendered":"https:\/\/propertyupdate.com.au\/?p=177565"},"modified":"2023-09-07T01:13:20","modified_gmt":"2023-09-06T15:13:20","slug":"why-the-alps-grand-plan-to-build-1-2-million-homes-is-destined-to-fail-a-reality-check","status":"publish","type":"post","link":"https:\/\/propertyupdate.com.au\/why-the-alps-grand-plan-to-build-1-2-million-homes-is-destined-to-fail-a-reality-check\/","title":{"rendered":"Why the ALP\u2019s Grand Plan to Build 1.2 Million Homes Is Destined to Fail \u2013 A Reality Check"},"content":{"rendered":"

Yes, you read it right, 1.2 million homes in the next five years.<\/p>\n

The headlines have been filled with the Australian Labor Party\u2019s ambitious plan<\/a>, but if you look closely, the numbers just don\u2019t add up.<\/p>\n

\"Building2\"<\/p>\n

The Grand Mirage<\/span><\/h2>\n

Firstly, let's clear the misconception: the government isn't going to lay down the bricks and mortar themselves.<\/p>\n

<\/div>\n

It\u2019s private builders who are tasked with this massive project, and the \u2018plan\u2019 offers nothing substantial to ease their burden.<\/p>\n

The plan depends heavily on private builders, but there's no real assistance to counter the lack of skilled workers, rocketing material costs, and a surge in construction prices. It's a tall order with no practical support.<\/p>\n

We know that hundreds of builders are going broke across Australia, and this plan does nothing to address that.<\/p>\n

Sure the plan promises to \u2018encourage\u2019 states to cut red tape and speed up building.<\/p>\n

But the so-called incentive, a measly $3.5 billion over five years, spread over the entire country?<\/p>\n

That\u2019s just a drop in the ocean.<\/p>\n

It won't even cause a ripple in state budgets, and it\u2019s utterly pathetic considering the infrastructure costs that come with accommodating all these extra houses and people.<\/p>\n

A Shaky Foundation<\/span><\/h2>\n

Let's first step back and acknowledge the current housing market situation.<\/p>\n

There is a real shortage of housing for Aussies to buy or to rent and this undersupply has been slowing building.<\/p>\n

New apartment supply is at 50% of what it was five years ago, and Mirvac CEO Campbell Hanan predicts less than 15,000 apartments will be completed in 2025.<\/p>\n

With annual immigration at 400,000, the numbers don\u2019t add up.<\/p>\n

\"Planning\"<\/p>\n

The Real Challenges: A Triple Whammy<\/span><\/h2>\n

Labor's plan does not address:<\/p>\n

    \n
  1. Affordable Housing:<\/strong> With the apartment supply dwindling and construction costs soaring, how can we provide affordable housing?<\/li>\n
  2. Necessary Infrastructure<\/strong>: The budget allows for a mere $3.5 billion over five years. It's a pittance when you consider the required roads, schools, hospitals, public transport, and other social infrastructure.<\/li>\n
  3. Social Housing:<\/strong> A one-off grant of $2 billion for social housing barely scratches the surface.<\/li>\n
  4. Poor construction quality - <\/strong>it's hard to forget the problems experienced in many of the shoddily built apartment towers that were built over the last decade. Remember Opal and Mascot towers\u00a0 in Sydney and the cladding problems many Melbourne apartment buildings experienced?<\/li>\n<\/ol>\n

    A Market That's Not Cooperating<\/span><\/h2>\n

    Despite some minor tax changes to attract offshore investors to the build-to-rent sector, this will take time to have an impact.<\/p>\n

    Mum-and-dad investors, who own over 90% of Australia's rental properties, are unlikely to invest in an era where there is continuing government interference \u2013 they\u2019re looking for certainty and safety for their investments.<\/p>\n

    The result? National housing starts and approvals are falling while immigration hits record highs.<\/p>\n

    Almost 90% of immigrants head to Sydney or Melbourne, contributing to a unique housing market that's concentrated in a few major cities rather than dispersed across smaller cities.<\/p>\n

    Urban sprawl on the outskirts creates further demands for costly public transport and social infrastructure, with an emphasis on medium or high-density apartments in the \u201cmissing middle\u201d of Australian suburban living.<\/p>\n

    \"Minister\"<\/p>\n

    A Pretense that Falls Short<\/span><\/h2>\n

    The ALP\u2019s reluctance to take real action raises eyebrows.\u00a0<\/strong><\/p>\n