SA Housing policy is Labor’s affordability solution but first homebuyers will be disappointed

Clare O’Neil is trumpeting South Australia’s Housing Roadmap as the template to build 100,000 new affordable homes. So far, the plan has built none.

In an at times rancorous debate over which party would be better at solving Australia’s housing affordability crisis, the Minister for Housing said the Government’s signature $10 billion plan for 100,000 homes had been “modelled by Treasury” and based on the data from South Australia.

The Malinauskas Housing Roadmap, tabled in June last year, followed the separate February 2023 Better Housing Future accord. Together, they are designed to fast-track the construction of 30,000 new homes by rezoning three separate sites on Adelaide’s fringes, while allocating $1.2b in infrastructure funding to plumb water and sewerage.

But not a single property has been delivered to a buyer from any of those rezoned sites.

The infrastructure critical to the plan is stuck in the planning pipeline: literally.

While the SA government’s policy has at least forced SA Water to get moving on pipe infrastructure, Liam Golding, chief executive of the SA branch of the Urban Development Institute of Australia, said all his members are seeing at this stage are planning approvals. Actual pipes, no.

“It’s partly red tape, and it’s partly just the reality that building a pipe takes time. It is pretty simple putting a pipe in the ground, but you can only do so many metres of it a day, and most of those pipes need to be going several kilometres,” Mr Golding said.

Unblocking 500 or so SA Water approvals would likely enable construction in the “low thousands”.

“In general, South Australia generally delivers 6,000 greenfield houses a year. So it’s not a huge amount,” Mr Golding said.

The much-needed major infrastructure is projected to be delivered in 2027 and 2028, meaning the bulk of the construction is still at least three years away.

Other SA initiatives to fast-track approvals are also slow-moving. Legislation for a Coordinator-General, with powers to overrule councils, is still to be passed in the SA Parliament. Zoning approvals are likely to be reduced from two years to one, which, while “positive,” is still frustrating, Mr Golding said.

“Shortening something so it only takes a year when we have an urgent need for housing right now, is a struggle,” he said.

It casts doubt on Labor’s ability to “deliver” 100,000 new properties for first home buyers, despite a South Australian construction site hosting the Prime Minister and Ms O’Neil for the program’s announcement.

“We’re building on a program that works here. The South Australian government (is) doing really good work here building affordable, entry-level homes that are only available for first home buyers. We’re taking that scheme national,” Ms O’Neil said during her address at the National Press Club yesterday.

She also told the audience that Treasury had modelled the 100,000 figure.

“The costing for this proposal has been done by Treasury, not cooked up by a bunch of politicians . . . their view is that 100,000 homes will be built under the policy.”

But the Government has not released the details of the modelling, prompting criticism from journalists in attendance as well as veteran economist Saul Eslake.

“Clare O’Neil again refused to release the Treasury modelling on which her assertions are based, nor to define what she means by ‘substantial’ in the context of how much prices will or won’t rise as a result of Labor’s policies,” Mr Eslake said of the debate.

If the modelling was released, it would be possible to determine if Ms O’Neil’s claims were based on South Australia’s Renewal SA housing program. Under that program, which dates back to 1995, the state takes a funding stake in developing new housing on vacant sites, or renovates social housing properties.

Mr Golding said Renewal SA delivers hundreds of new dwellings each year, but often compete with private developers.

Demand up, while supply waits

Both parties have policies that would increase demand: Labor by expanding its program for first home buyers to put down a five per cent deposit and a Help to Buy shared equity scheme, the Coalition with mortgage tax deductibility and access to super for a home deposit.

Mr Eslake described it as a “sad day for aspiring first home buyer (where) both major political parties are proposing policies which will add to upward pressure on housing prices — ostensibly to assist those trying to buy their first home, but in practice further enriching those who already own at least one”.

The policies will likely push prices further out of reach for first home buyers, boosting demand when supply is still years away. South Australia falls into that category where the Government offers an interest-free starter loan to cover stamp duty, two per cent deposits for graduates buying or building a property, and developing a new three per cent low deposit loan for first-home buyers of new builds.

But the demand is still exceeding supply, and Mr Golding welcomed any proposal that would unlock federal infrastructure funding for greenfield sites.

But big infrastructure projects continue to compete for much-needed labour, with the industry needing an extra 130,000 workers if the goal of building 1.2 million new homes by the end of 2029 is to be reached, according to Master Builders Australia.

Mr Golding pointed to the upcoming construction of the new Adelaide Children’s Hospital, the Olympic Dam expansion and the construction of a major tunnel that would absorb skilled labour.

“Those projects require relatively transferable skills, taking people off building sites for housing. We are concerned about the current skills crunch, and when we look forward and we get really very terrified, frankly,” he said.

While O’Neil is telling voters to look to South Australia for inspiration, first homebuyers might want to look away to avoid being disappointed.