How to resolve AdBlock issue? HIA says Govt 1.2 million housing target becomes harder to reach 'from today'
“FROM TODAY, it gets harder for Australia to build the 1.2 million homes governments have committed too.”
That is the view of Housing Industry Association (HIA) chief economist Tim Reardon.
From today, new Limited Recourse Borrowing Arrangements (LRBAs) can no longer be used by Self-Managed Super Funds (SMSFs) to build new residential homes.
HIA has consistently warned that removing this source of finance from the housing market will reduce investment in new homes at precisely the time Australia needs significantly more housing.
“Initial analysis indicates that the SMSF ban is likely to have a greater adverse impact on the supply of new homes than the government's changes to negative gearing and capital gains tax combined,” Mr Reardon said. 
“Despite this, there hasn’t been a cost/benefit analysis, a regulatory impact statement or even Treasury modelling released to justify the policy change.
“The government hasn’t declared what the net public benefit will be from denying tens of thousands of Australians access to a home, each year,” Mr Reardon said.
“Our survey of Australia’s largest home builders indicates the SMSF changes alone will reduce detached home commencements by between 3.5% and 5% per year.
“In addition, around 2,500 new home contracts that had already been signed are expected to be cancelled as the administrative arrangements could not be completed by today.
“The adverse shock of prohibiting borrowing to build a new apartment by an SMSF is likely to be more significant.
“Governments have committed to delivering 1.2 million new homes. Yet from today, Australia is removing one of the investment pathways that has helped finance the construction of new housing.
“You cannot make it harder to invest in new homes and expect more homes to be built. Not a single SMSF lives in a home in Australia and therefore aren’t adding to demand.
“And when an SMSF builds a new home, they do not add to demand, but they only add to supply,” Mr Reardon said.
“The housing challenge needs to be considered as if we are trying to squeeze 11 million households into 10 million homes.
“The cause of the housing challenge isn’t that we have too many investors, or that prices are too high. These are the symptoms of a shortage of housing stock, not the cause of the shortage.
“Every new policy should be assessed against a simple test: does it increase the number of homes built?
“The government should release the modelling that informed this decision, including its estimate of how many fewer homes will be built as a consequence of banning SMSF borrowing for residential property,” Mr Reardon said.
“If that modelling has not been undertaken, then the government should commission and publish a cost benefit analysis of the policy, including its impact on housing commencements, rental supply, construction employment and government revenues for state and federal governments.
“Treasury has estimated the housing supply consequences of the changes to negative gearing. Australians deserve the same transparency for a policy that will have a tangible adverse impact on the supply of new homes commencing construction.
“If we are serious about building 1.2 million homes, every policy should encourage, not discourage, investment in new housing,” Mr Reardon said.
ends