The Australian housing market is in crisis : soaring prices, increasing rental stress, declining home ownership rates and a growing number of people experiencing homelessness .
Author
- Ehsan Noroozinejad
Senior Researcher, Urban Transformations Research Centre, Western Sydney University
In response, Prime Minister Anthony Albanese has announced a $33 billion housing investment plan as part of his government's latest budget .
This is a central plank of Labor's re-election pitch, aimed at showing housing commitment by:
Making it easier to buy, better to rent, and building more homes faster.
What are the key features of the plan?
The plan includes two headline measures aimed at boosting housing supply and helping buyers:
1-Expanding ' Help to Buy ' for first-home buyers:
The Help to Buy program provides shared-equity loans to first-time homebuyers so they can purchase properties with smaller deposits. Under this program, the government buys a portion of the property to lower the required mortgage amount for buyers.
Under the initial terms of the scheme, the Commonwealth offered up to 30% of the price for existing homes and 40% for new constructions, while restricting eligibility to households within specific income and property value ranges.
Now, the Albanese government has raised cap levels to enable more people to become eligible. The income ceiling for single buyers will increase from $90,000 to $100,000, while the maximum income limit for couples and single parents will rise from $120,000 to $160,000.
These higher caps mean more than five million Australian properties would fall under the scheme's scope, significantly expanding buyers' choice.
2-Investing in prefabricated and modular homes:
In November 2024, the Albanese government announced a $900 million productivity fund to reward states and territories that boost housing supply by removing barriers to prefab and modular construction.
And now, the Albanese government is budgeting another $54 million for the advanced manufacturing of prefab and modular housing industry. This includes $5 million to create a national certification system to streamline approvals and eliminate red tape.
This aims to speed up home construction through off-site manufacturing technologies, which produce components in factories before assembling them on-site.
Minister for Industry and Science Ed Husic claims these homes can be finished in half the time of conventional construction. Even a 20-30% time saving would be significant.
These buildings are also more energy efficient, more resilient and cheaper.
Can these measures fix the problem?
The big picture problem is, Australia has simply not been building enough homes for its growing population.
According to the Urban Development Institute of Australia's State of the Land Report 2025 , the federal government will fail (by 400,000 dwellings) to meet its target of constructing 1.2 million new homes by 2029.
Prefab building methods make up just 8% of new housing developments in Australia .
Some countries use it much more: Sweden boasts more than 100 years of prefab construction experience, where more than 80% of homes are produced in factories and then assembled at their destinations.
Modular housing can be described as a promising step forward . But while they offer potential improvements in speed and cost efficiency, it cannot solve the massive housing deficit on its own without structural policy reforms in the near future.
What about the Help to Buy scheme?
Shared-equity loans tackle a different side of the problem: affordability for buyers.
Experts describe Help to Buy as a "modest" but useful "piece of the puzzle" in solving the housing crisis.
While its impact on general house prices and universal housing affordability is minimal, policymakers worry that programs like these unintentionally push up prices by boosting demand.
Federal v state roles
Housing policy in Australia is a shared responsibility .
State governments control planning, zoning and most of the levers that determine how quickly homes can be approved and built (such as releasing land for development or approving apartment projects).
The federal government mainly controls funding and high-level programs, so the success of the Albanese government's plan will depend a lot on cooperation with the states and territories.
However, there's some inherent tension here: Canberra can set targets and provide incentives (funding), but it can't directly build houses or force local councils to approve projects faster.
That's one reason behind the prefab certification idea: it removes one potential regulatory hurdle at a national level.
Political timing
The timing of this housing plan announcement is no coincidence.
Australia will have a federal election by May 2025 . Most voters will likely consider housing costs and cost-of-living to be primary issues.
The expansion of Help to Buy enables Labor to target first-home buyers, which may be important in the election.
The new housing plan is ambitious in scope and certainly a welcome effort to turn the tide on housing affordability.
However, renters and prospective buyers are unlikely to experience quick benefits from these housing initiatives, as it will require sustained action and cooperation well beyond the upcoming election cycle.
The Help to Buy program will begin later in 2025, and the positive effects of investing in prefabricated/modular housing will require a period of time before they become apparent.
It is unclear whether these measures will effectively persuade voters and produce substantial improvements.
Dr. Ehsan Noroozinejad has received funding from both national and international organisations to support research addressing housing and climate crises. His most recent funding on integrated housing and climate policy comes from the James Martin Institute for Public Policy.
