Australia is facing a housing crisis. With low rental vacancy rates, skyrocketing home prices, and a shortage of social and affordable housing, many Australians are struggling to find a place to call home.

In this episode of the Get Rich Slow Club podcast, Tash and Ana speak with Housing Minister Clare O’Neil. Together, they discuss the factors behind the crisis and what the government is doing to address it.

Why is Australia in a housing crisis?

Minister O’Neil outlines that the core issue is supply.

"The bottom line is that we have a housing shortage in our country," she says. "We do not have as many houses per person as the countries we would normally compare ourselves with."

The housing shortage has been building for decades, with construction failing to keep pace with population growth. According to Minister O'Neil, this imbalance has driven up prices and made homeownership and renting increasingly difficult.

"If you're struggling to find a rental, if you're feeling that house prices are moving so fast that you’re always one step behind, it all comes back to the fact that we don’t have enough homes," O’Neil says.

The housing affordability issue has been developing since the 1980s, with house prices diverging further from wage growth. As a result, the average home now costs about eight times the average income.

Minister O'Neil claims the lack of supply over the past 40 years has led to higher property prices and rental stress, leaving many Australians feeling locked out of the housing market.

The Government’s plan to build 1.2 million homes

To tackle the housing shortage, the Federal Government has set an ambitious target: building 1.2 million new homes over the next five years.

"It's going to be really hard to build 1.2 million homes over five years, but we need boldness and ambition here," O’Neil acknowledges.

Achieving this goal involves multiple strategies:

• Unlocking land : The government is working with states and territories to free up land for development.
• Planning reform : Outdated planning laws are being revised to facilitate faster approvals.
• Boosting the construction workforce : Efforts are being made to train more tradies to address the skills shortage.
• Improving productivity : The government is investing in ways to make construction more efficient and cost-effective.

While progress is being made, O’Neil admits that reaching the target will require sustained effort and collaboration between federal, state, and local governments.

The role of social and affordable housing

Beyond private housing, the government is also investing in social and affordable housing.

"We are conducting a massive build of social and affordable homes – 55,000 over five years," O’Neil says.

This is a significant move, as the Commonwealth has not invested in public housing on this scale for a long time.

Social housing supports vulnerable Australians, including people experiencing homelessness, key workers like aged care staff, and veterans. Expanding this sector will aim to help those who cannot afford housing through the private market.

Support for renters and first-home buyers

The Government is also working to strengthen renter protections. Under the "Better Deal for Renters" initiative, states are being encouraged to implement new laws that provide greater security and fairness for tenants. Additionally, rent assistance has been increased by 45% to help low-income renters cope with rising costs.

For aspiring homeowners, the Home Guarantee Scheme and the upcoming Help to Buy Program are designed to make it easier to enter the property market.

"I am extremely passionate about helping all those young people listening right now, to be able to get into the property market and own a home of their own," O’Neil says.

The Home Guarantee scheme allows eligible buyers to purchase a home with as little as a 5% deposit. The Help to Buy Program provides a shared equity model where the government co-invests in the home purchase.

The debate over housing policy solutions

Many have suggested policy changes such as banning foreign investors, reducing migration, or removing tax incentives like negative gearing and capital gains tax discounts. O’Neil, however, argues that these measures are not silver bullets.

"I absolutely know that’s not true," she says regarding the idea that removing negative gearing would fix the crisis. "Anyone presenting that as the be-all and end-all is not a serious contributor to the debate."

Similarly, banning migration is not a simple fix. O’Neil points out that house prices soared during the COVID-19 border closures, showing that migration is not the sole driver of affordability issues. Instead, she emphasises the need for a "sustainable migration program" that includes skilled workers to help expand the construction industry.

Superannuation and homeownership: a controversial proposal

One of the more contentious policy proposals is allowing young Australians to access their superannuation to buy a home . The Liberal Party has proposed allowing Australians to withdraw up to $50,000 from their super to put towards a home deposit.

O’Neil strongly opposes the idea. "It would basically facilitate a generation of young people giving their retirement savings to the older generation who own all the property wealth," she argues. "It's the exact opposite, basically, of what needs to happen."

Economic modelling suggests that allowing super withdrawals would simply drive up house prices, making homes even less affordable.

"Some studies estimate that it would add $70,000 to home prices in Sydney," O'Neil says.

The challenges of urban planning and NIMBY opposition

A key challenge in increasing housing supply is opposition from existing homeowners.

"One of the top barriers to building the housing we need in Australia is planning schemes that have been designed to protect existing landowners," O’Neil explains.

The "Not In My Backyard" (NIMBY) mentality has made it difficult to increase density in many areas. However, O’Neil is optimistic that attitudes are shifting.

"There’s a real voice coming out that’s saying: ‘Wait a second, if we keep that attitude up, none of our kids are going to be able to afford a home,'" she says.

The path forward

The Australian housing crisis is a complex issue with no single solution. However, the government is seeking to take a multi-pronged approach by increasing housing supply, strengthening renter protections, and assisting first-home buyers.

"This is the first time that I have ever seen Commonwealth, state, and local government all seize the problem and try hard [together] to fix it," O’Neil says. While change will take time, she is confident that the efforts being made today will lead to better housing outcomes for future generations.

For those looking to buy their first home, O’Neil advises researching available government programs and understanding that solutions are being implemented.

"It's really tough right now – no one is going to deny that," she says.

"Just get your facts together, have a look at these government supports that are available, and just understand that you can get in with a lower deposit these days."

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