Affordable Housing in Australia: Challenges and Opportunities

The Australian government has implemented various policies to address housing issues, including the exemption of owner-occupied housing from land tax and stamp duty for investment purposes. The government also provides financial assistance to those building social housing and offers a tax exemption on rent up to a threshold value. The National Affordable Housing Agreement (NAHA) program aims to provide affordable, safe, secured, and sustainable housing to all Australians. Additionally, the First Home Owner Grant (FHOG), First Home Saving Account (FHSA), and Home Purchase Assistance (HPA) programs were introduced to assist low-to-moderate income earners in buying their first home. The National Rental Assistance Scheme provides financial assistance to owners renting below market rate. To sustain these policies, funding from the government and private firms for construction of housing is crucial.

Contents
1.Background of the policy.........................................................................................................................2
2. Overview of the policy............................................................................................................................3
3. Future achievement of the policy.............................................................................................................4
4. Positive and Negative of policy...............................................................................................................5
5. Implementation of the Policy...................................................................................................................6
5.1 Housing Subsidies.............................................................................................................................6
5.2 Grants for social and affordable housing...........................................................................................7
5.3 Housing Tax......................................................................................................................................7
5.4 Housing Finanace..............................................................................................................................7
5.5 Tax exemption for rent......................................................................................................................7
6. Program created as a result of policy.......................................................................................................8
6.1 National Affordable Housing Agreement (NAHA)..........................................................................8
6.2 FHOG................................................................................................................................................8
6.3 FHSA: First home saving account.....................................................................................................9
6.4 HPA: Home Purchase Assistance......................................................................................................9
7. Organizations managing the programs....................................................................................................9
8. Sustainability of the policy....................................................................................................................10
References.................................................................................................................................................12
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1.Background of the policy
As a human, there are some basic needs which should be satisfied. One of those needs include
housing. Housing is important as it provides shelter and security to the humans. For some it is a
symbol of wealth and for some it is a start up for a business. In Australia, earlier times, most of
the people were well housed. Australia has been characterized by the quality housing at earlier
times. There were high housing standards in Australia with good house safety. But, not as the
case today. Nowadays Australia is facing a lot of challenges with its housing. Australians
housing is one of the most unaffordable housing in the world. It is due to the less stock, low
affordability, decrease in outright ownership, and disadvantages in the rental sector. All these
factors are making the housing problem in Australia a bigger one. Therefore, all these factors are
resulting in homelessness, insecurity of housing, less supply of the houses, increase in the
demand for housing and the rise in the prices. Due to all these factors a solution to the housing
policy of Australia is desired.
This fact was highlighted in many newspapers and the government come with a new housing
policy. Also, new contracts are given by the government for the building of new housing (Beer,
et al., 2017). The government also proposed community housing so that the problem of housing
can be solved. Therefore key issues regarding the housing policy were as follows:
 Affordable housing to everyone.
 Redevelopment of the old housing
 New methods of building efficient housing.
 Check for second home ownership.
 Sustainable housing and environmental issues
 Unoccupied housing
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2. Overview of the policy
Due to the housing crisis in Australia, the Australian government decided to establish new
policies that will provide affordability to houses. These policies focus on infrastructure projects.
The current housing policy includes affordable housing to all classes.
2.1 Commonwealth state housing agreement: This plan includes Australian government with
state and territory government. This plan will provide homes for homeless, rent assistance,
purchase assistance, and reduction of the crowd in urban areas.
2.2 National rental affordability scheme (NRAS): This plan will provide rental assistance by
tax exemption and by providing subsidies to the nationals having low to moderate income. This
plan includes Commonwealth, states and territories. It will also provide financial assistance to
the builders and the investors so that shortage in the housing can be overcome. Also, the NRAS
is providing financial assistance to the owners who are renting their houses below the market rate
(Wilson, Arman, & Zillante, 2010).
2.3 Commonwealth rental assistance: This assistance is provided to those owners who are
renting their accommodation below the market rate. They have been given a tax benefit. The
Exemption is based on the family situation.
Rental assistance can be provided by the government by reducing taxes and by giving subsidies.
The policy made by the government includes the following
 Housing Affordability Fund: Basically the main aim of this policy is to reduce the prices
of the new housing. This is done by the government in different ways. By providing
subsidies, by giving tax exemption, the government is trying to reduce the cost of houses.
 National Rental Affordability Scheme: This policy is also helping to reduce the rents of
the housing. The government is giving tax exemption on rents
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 Land Release: Releasing the commonwealth land for the development purposes to
increase the supply of the land (Government, 2014).
 Increase in stamp duty: stamp duty is increased for the second owner.
These policies are created for providing affordable rents and housing to the nationals, but there
are some positive as well as the negative of the policies, although these are helping workers in a
way to reduce wage pressure, but it is also increasing the burden on the government.
3. Future achievement of the policy
Housing affordability will lead to maintaining the economic growth. It is expected that due to the
affordable prices of housing in the country will grow economically. The competitiveness will
increase. Therefore the pressure of the workers will reduce as there will be less pressure of
wages. Hosing affordability also helps in the worker mobility. It will reduce the mobility of
workers, which helps in efficient work performance. Therefore worker market will work
effectively, which contributes to the economic growth. It will also help in reducing the inflation.
Also by getting secured housing, the health of the worker will improve. This will result in family
health stability. Therefore, due to this money can be saved as which is spent on medicals.
Education of the students can be attained when living in the safe and secure environment.
Reduction of mobility can give job growth, which is ultimately helping the economic growth of
the country. It also helps in reducing the welfare payments provided by the government.
Providing housing for the working class also helps government to get rid of all the subsidies
provided by them for housing purposes (Martin, Pawson, & Nouwelant, 2016). Also the tax
exemption provided by the government. This will help in reducing the financial burden from the
government.
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4. Positive and Negative of policy
Every policy has its pros and corns. There are some positive aspects as well as negative aspects
of the policy. Due to the housing affordability policy, it helps in providing the security and
shelter to the homeless. Safety is very important to each person. Therefore, by getting the houses
to stay in everybody feels secure and safe. Due to the secure feeling in the worker class the wage
pressure is reduced. This will lead to effective work in the work area. The efficient work will
pull out the progress. In turn the economic growth of the country will take place. Also, children
will get healthy and safe environment to learn and study. Therefore, economic growth of the
country means the progress of the country. Also, GDP (gross domestic product) is also increased.
Although it depends on various factors, but it is one of the factors. Mobility is reduced after the
housing policy which also results in the economic growth of the country. Therefore major
outcomes of the housing policy are as follows
 Affordable housing by tax rebates.
 Rental assistance by subsidies to provide shelter and safety
 Grants and subsidies to home buyers
 Security for the children
 Reduction in mobility
 Relieving rental stress
 Increase in economic growth
There are also negatives of the policy. When rent assistance is provided to many people it has a
patchy record. This is because maximum payments were not same as actual as rents. Due to this
76% of tenants received the actual payments, whereas the rest were in rental stress. The rental
assistance was given up to 25% of the earnings. Somehow it produced a problem and increased
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the rental stress on others. Banking sectors are providing loan assistance and finance to the
housing sector. Therefore, due to this risk were higher and it is curbing the growth as well.
Also, due to the grants, subsidies and tax exemption by the banks the financial burden on the
government has increased (ACOSS, 2015). This leads to the borrowing more money from the
banks, which is reducing the growth of the nation. Therefore, negative outcomes of the policy are
as follows
 Patchy record of the rental assistance
 Increase in Financial burden over the government
 Risk to the banking sector by loans and finances.
5. Implementation of the Policy
The policy of affordable housing can be implemented by the government by incorporating
subsidies and by exempting taxes. The subsidies can be given to those living in no government
housing. Also, grants should be given for building new housing. Tax exemption is also important
for affording the rents. A threshold value must be set, so that subsidies and tax exemption could
be benefited by the working class.
5.1 Housing Subsidies
Subsidies in the housing sector are given through tax benefits and with cash transfers. Subsidies
in case of rent assistance are given. Subsidies are given to those who are living in non
government housing. These are given to the tenants of the community housing. Also the
indigenous housing providers are also eligible for the rental assistance. A payment of 75 cents
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per dollar is paid as a rent assistance above a fixed amount that is the rent payable by the tenant.
Tax benefits are also given over the rent to the tenants.
5.2 Grants for social and affordable housing
Grant is given by the federal and state government for affordable housing. Government is
signing contracts with different firms to promote social housing. The state government is giving
grant to different societies for affordable housing.
5.3 Housing Tax
Owner occupied housing is exempt from the tax. The owner occupied the same house is
exempted from the land asset tax. This is due to avoid the extra expenditure on their own
housing. All state government levies taxes on land to ensure the use of that land. Also stamp duty
is taken by the government for those who buy houses for investment purpose.
5.4 Housing Finanace
Financial assistance is given by the government to those who are building social housing. Loan
from different banks are also allowed. But due to this banking sector is in great risks exposing to
the housing sectors.
5.5 Tax exemption for rent
Affordable renting can be done with the help of the policy. A tax exemption is given on the rent
up to a threshold value so that rents can be paid by the occupier. This will help the persons to
afford the rented accommodation in the country (Brenni, 2016).
For the implementation of these policies, the government has to face different challenges. But
due to increase in the financial burden the policy implementation takes time. The government
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should make plans to attract private money for the investment purpose. Also small housing can
be made for the affordability purpose.
6. Program created as a result of policy
Many programs are created as a result of housing policy in Australia. Under the Australian
government housing policy the National Affordable Housing Agreement plan has been
launched. Basically, this scheme provides assistance to the nationals with low to moderate
income.
6.1 National Affordable Housing Agreement (NAHA)
This program will ensure that all Australians should have access to affordable, safe, secured and
sustainable housing. This plan replaced the Commonwealth State housing Agreement. This plan
includes Australian government with state and territory government. This plan will provide
homes for homeless, rent assistance, purchase assistance, and reduction of the crowd in urban
areas (Pisarski, 2015).
Various plans have been created for buying the home for low to moderate income buyers. The
plans are as follows:
6.2 FHOG
The First home owner plan is introduced to implement GST (Goods and service tax) to
compensate first home buyers. This plan targets at the purchase of new home mostly in territories
and states.
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6.3 FHSA: First home saving account
This program helps Australian persons to save money for their first home. This account is a low
tax account, therefore people can save more with very low tax on their income.
6.4 HPA: Home Purchase Assistance
This plan is launched by the government to provide assistance to the Australians to improve their
access to homes. The government is giving tax benefit, lending, giving loans, mortgage relief and
interest rate assistance.
Assistance in private sector by CRA: It is a plan that will provide tax free income. It acts as a
support to low income persons to buy homes (ACOSS, 2015).
7. Organizations managing the programs
The National Rental Assistance Scheme comes under the Department of Social Services (DSS)
which is the component of Australian government. This is the organization which addresses the
shortage of affordable rental housing. It helps in offering financial assistance and incentives to
the owners. It gives financial assistance to the persons who have low to moderate income and to
those owners who are renting below the market rate (Monro, 2017).
The housing assistance in Australia was delivered under the NAHA that is National affordable
housing assistance. Many people receive the cash payments under this organization. Under this
organization subsidies are paid to the Australians for the rent purposes. The people having lower
income have been served with this organization. Also, many people have received the first home
owner scheme assistance through this organization. Home purchase assistance is also provided
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by this organization (Government, 2014). The people with lower income are provided with low
priced housing that is created by government.
Direct government assistance where government is the organizer is providing assistance to the
private sector that is renting its houses. This assistance is provided to those who demand from
the government. It helps in providing financial assistance to low and moderate income families
through the CRA plan.
8. Sustainability of the policy
Housing policy is providing homes to the homeless. It is also helping in rental assistance to those
who are needy and have less income. There is a lot of financial assistance provided by the
government to the owners and the persons who demand for rental assistance. Therefore, this
result in the large financial burden over the government of Australian. Therefore, Rental
assistance policy can survive until the government has enough funds for providing the rental
assistance to the nationals. If it starts affecting the overall finances, the reforms in the policy
should be made (Legacy, Legacy, & Parkinson, 2016). Also, rental assistance is possible if there
is availability of the rented accommodations. Shortage of rental housing mainly for low income
earners is there in Australia. So, rental assistance becomes of no use in that case. So, the building
of housing is also necessary. For the sustenance of the policies, funding is also the main aspect.
Funding by government as well as by private firms for construction of housing. If the funding is
stopped, then the construction will not take place. Therefore, policy will not work. So. Funding
assistance is also the main area of the sustenance. Therefore, the sustenance of policy depends on
 Financial support from the government.
 Construction of low rent housing for rental assistance.
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 Fare financial assistance taken by the owners
It is very important for the government to construct housing. Encouraging housing growth by
implementing good policies and strategies is important for bringing economic development and
income growth of a region. Therefore, it is important for the local government to make the
housing cost stable buying purposes as government has a strong impact on the cost.
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References
ACOSS. (2015). An Affordable Housing Reform Agenda. Retrieved from
http://www.acoss.org.au/images/uploads/Housing_paper_March_2015_final.pdf
Beer, A., Budge, T., Martin, J., Morris, A., Hanckel, B., & Horne, S. (2017). Local government
and housing in the 21st century: A discussion paper. Retrieved from
https://www.uts.edu.au/sites/default/files/LG%20and%20Housing%20-%20Discussion
%20Paper%20March%202017.pdf
Brenni, M. (2016). Working together for better housing and sustainable communities.
Department of Housing and Public Works. Retrieved from
http://www.hpw.qld.gov.au/SiteCollectionDocuments/HousingDiscussionPaper.pdf
Government, A. (2014). Housing assistance in Australia . Australian Institute of Health and
Welfare. Retrieved from http://www.aihw.gov.au/WorkArea/DownloadAsset.aspx?
id=60129549033
Legacy, J., Legacy, C., & Parkinson, S. (2016). Transforming public housing in a federal
context. RMIT University. Retrieved from
http://www.ahuri.edu.au/__data/assets/pdf_file/0021/8418/AHURI_Final_Report_No264
_Transforming-public-housing-in-a-federal-context.pdf
Martin, C., Pawson, H., & Nouwelant, R. (2016). Housing policy and the housing system in
Australia: an overview. Retrieved from
http://shapingfutures.gla.ac.uk/wp-content/uploads/2016/09/Shaping-Housing-Futures-
Australia-background-paper.pdf
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Monro, D. (2017). Public Rental Housing Policy: Learning the Lessons from Overseas.
Retrieved from
http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Li
brary/pubs/rp/RP9798/98rp06
Pisarski, A. (2015). Response to Labor’s Discussion Paper on Housing Affordability. Retrieved
from http://www.shelter.org.au/sites/natshelter/files/public/documents/ALP%20Final.pdf
Wilson, L., Arman, H., & Zillante, G. (2010, January). National Housing Policy in Australia: Are
New Initiatives in Affordable Housing Sustainable? The International Journal of
Interdisciplinary Social Sciences: Annual Review, 5(2), 129-147. Retrieved from
https://www.researchgate.net/publication/262838025_National_Housing_Policy_in_Aust
ralia_Are_New_Initiatives_in_Affordable_Housing_Sustainable
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