HIA
THE Federal Government’s ambitious target of delivering 1.2 million new homes could become significantly harder to achieve, with the Housing Industry Association warning new restrictions on Self-Managed Superannuation Fund (SMSF) borrowing are likely to trigger thousands of cancelled home building contracts.
Following the passage of the legislation through Parliament, HIA is calling on Treasury to publicly assess the impact the reforms will have on housing supply, arguing the changes have been introduced without a transparent cost-benefit analysis.
HIA Chief Economist Tim Reardon said that while increasing housing supply remained the centrepiece of the Government’s housing strategy, the latest reforms risked removing a vital source of investment that helped finance the construction of new homes.
“The ban on SMSFs building new homes undermines the Government’s objective of building 1.2 million homes and improving housing affordability,” Mr Reardon said.
The industry body has released the results of a survey of Australia’s largest detached home builders, representing more than 40 per cent of the nation’s detached housing construction, providing what it says is the first direct evidence of the policy’s likely impact.
The survey found builders currently hold 3613 signed contracts with buyers using SMSF Limited Recourse Borrowing Arrangements that are yet to begin construction. Of those, builders estimate 2415 contracts – almost 67 per cent – are likely to be cancelled once the legislation takes effect.
The findings also point to weakening investor confidence, with more than 70 per cent of builders reporting a decline in investor enquiries since the Federal Budget.
HIA estimates the combined effect of contract cancellations and weaker future sales could reduce detached housing commencements by between 3.5 and 5 per cent nationwide.
