NAB promises $60b to first home buyers, developers amid housing crisis

The big four bank intends to lend at least $30 billion to first home buyers turning to the recently expanded 5% Deposit Scheme.

Caps on the number of buyers able to access the scheme and income thresholds previously limiting eligibility were lifted earlier this month, allowing more buyers to purchase with smaller deposits without paying for lenders mortgage insurance (LMI).

NAB has earmarked another $30 billion for loans to commercial real estate development projects intended to be largely used for residential housing.

Such projects might include build-to-rent projects, student accommodation, land lease, and community housing developments.

Confidence in hitting Housing Accord target wanes

Advocacy group AMPLIFY says confidence in meeting the Housing Accord goal of building 1.2 million homes by 2029 has slumped, with current trajectories indicating Australia is on track for fewer than 800,000 completions.

"Low confidence in housing delivery reflects more than just supply issues, it signals deeper challenges," AMPLIFY CEO Georgina Harisson said.

"Without community trust and confidence, the bold reform we need will be harder to achieve."

Amid that slump in confidence, NAB argues finance is one lever that could tackle supply challenges. 

"Building homes is being held back by complicated rules, slow approvals, poor coordination, worker shortages, high costs, and falling productivity," NAB CEO Andrew Irvine wrote in an open letter to customers, government, developers, and key stakeholders.

"New thinking is needed to make it easier and faster to build homes where people want to live."

NAB's commitment has the potential to fund approximately 50,000 homes and support 55,000 buyers into the market, but industry argues that even abundant finance may not translate to shovels in the ground.

"We need an enormous increase in the volume of lending to build new homes," Housing Industry Australia chief economist Tim Reardon told YourMortgage.com.au.

"We've had some significant impediments - tax costs imposed on lending - most notably state governments added additional taxes to overseas-based banks lending to build homes, particularly apartment complexes, in capital cities."

But Mr Reardon identifies land as "the key obstacle."

Land prices the 'key obstacle' to housing target

"It's very difficult for governments to lower the cost of construction … land supply is the area they have direct control over lowering costs."

He says the current framework loads multiple infrastructure costs and taxes into the price of new lots.

A household buying a block of residential land typically covers the cost of the land and the infrastructure servicing it, as well as the maintenance of that infrastructure and connecting infrastructure in perpetuity.

They're also taxed through stamp duty, GST, and development taxes charged to those developing the land.

The cost of land – which rose 6.8% last financial year – is also having an impact on affordability of established houses, as buyers who might otherwise build turn to existing properties.

"It's not uncommon for a household to be paying 150% to 200% of the cost of the provision of infrastructure to a new greenfield site - that's the land barrier," Mr Reardon said.

The HIA urges governments to pull policy levers needed to open up the supply of land, particularly at the council level.

"They need to build 240,000 [dwellings per year] … [that's] going to require governments to reduce the volume of taxation on housing at all three tiers of government," the expert continued.

"I'm hopeful with what we can see coming in terms of policy reforms, that by 2030 we will be building homes at the rate necessary to achieve 1.2 million homes over the following five years."

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