Budget 2024 was handed down in May and contained several measures aimed at easing the nation’s housing crisis.
We explore their likely impact on Perth’s rental market.
1. Rental Assistance
Across the country, rents have been climbing across the country and more people are finding it difficult to meet the rent. So it should be welcome news for many that Budget 2024 increases rental assistance payments by 10%.
This should also provide some further assurance to landlords that tenants will be able to continue to meet their rental repayments, even in light of cost of living increases.
Virtually nowhere in the country has been impacted quite as much by rising rents as Perth. Over the past year, the median house rent in our city has risen 16.1% to $650, according to REIWA data. Meanwhile, the median apartment rent has lifted even more rapidly, rising 20% to $600.
As we’ve previously written, the pace of rental growth – and the lack of available rental properties – has been causing a full-blown rental crisis across our city.
To qualify for rental assistance, tenants need to be either receiving income support payments or qualify for Family Tax Benefit A.
2. Affordable and social housing
The government also recognises that one of the factors driving both house and rental prices higher is a chronic lack of supply. There simply aren’t enough properties on the market compared to the number of people looking for accommodation.
To help ease the strain, it has used the Budget to allocate another $6.2 billion to its ‘Homes for Australia’ Plan. This forms the basis of its pledge to build 1.2 million new homes across the country by the end of the decade.
Perth should be one of the main beneficiaries of this policy, should it come to fruition. The housing supply here isn’t keeping up with population growth.
Last financial year, our city grew by 81,300 people – or 3.6% – bringing the city’s population to 2.6 million. Every one of those new arrivals needs somewhere to live, and many will need somewhere that is relatively affordable.
As part of the Homes for Australia plan, the Budget has allocated $1.9 million in concessional loans for community housing providers, in the hope this will lead to the construction of 40,000 social and affordable homes.
Hopefully, some of this construction will take place in Perth, helping ease pressure in the city’s housing market.
3. Student accommodation
One of the real factors contributing to Australia’s population growth has been a rise in the number of overseas students. 2023 saw the highest number of overseas students ever recorded as living in Australia, at 713,144.
Perth is home to some of Australia’s best universities, and we’re genuinely excited by the potential impact of the new CBD-based Edith Cowan University campus when it comes to revitalising the centre of Perth.
Of course, the students (and staff) who come to Perth will all need somewhere to live. The government used Budget 2024 to announce it will require universities to do more to accommodate them to take pressure off the private rental market.
In fact, it will tie a university’s ability to offer places to international students specifically to the amount of housing it provides.
This is likely to mean more student accommodation in the Perth CBD (which is likely to be followed by more private accommodation), as well as in suburbs close to our city’s universities.
4. Infrastructure and construction
The Budget includes an extra $1 billion earmarked for new housing infrastructure, including roads, sewers, energy, water, and community infrastructure.
While this should help establish more Greenfields suburbs, we’ve argued that Perth really needs more middle ring and inner city development.
That said, what holds a project back more than anything is often a lack of skilled labour to carry out the build.
The government has pledged to boost the number of construction sector workers, in an effort to overcome labour shortages, including offering 20,000 new fee-free TAFE training places for trades, as well as financial incentives for apprenticeships.
Hopefully, this won’t just provide more labour but might also combat the rising construction costs that have contributed to the shortage in construction work.
5. Cost of living
While not directly related to property, there are a couple of other measures that Budget 2024 introduces which are likely to please homeowners and tenants alike.
The Budget’s Stage 3 tax cuts reduce the current 19% tax rate to 16%, and the 32.5% rate to 30%. They also increase the thresholds for the 37% tax rate from $120,000 to $135,000 and the 45% tax rate from $180,000 to $190,000. This saves individual taxpayers up to $4,546 in tax a year.
There is also some direct relief from the cost of rising power bills, which comes in the form of a $300 subsidy.
Want more?
Budget 2024 contains several measures that could help make paying the rent – or mortgage – a little easier. Let’s hope this has a positive impact on our rental market by easing the pain for many and encouraging the development we so badly need.
Are you looking to invest in Perth real estate, rent out your Perth property or find your next Perth rental home? We can help. Get in touch with our specialist Perth rental team today.
