Current Property News: Market Commentary

 The State Government’s much anticipated housing affordability strategy has quashed the notion of an increase to the first home owner’s grant and instead reached out to private investors for help.

The strategy’s objective is to create 20,000 more affordable homes by 2020 for low-income earners. This includes delivering 2,500 more social dwellings by 2013, and 5,500 subsidised private rental opportunities and 32,000 affordable housing lots by 2020. A key motivation for the strategy is the growing waiting list for social housing, which has doubled over the past 10 years to more than 24,000 applications.

As part of the plan, the State Government is looking to entice private landlords to sign up 500 long-term leases at a rent of 20% below market value to social housing tenants. The incentive being offered is a guarantee on the quality of the home when it’s returned at the end of the lease.

"The strategy aims to combine the resources of Government with the expertise and experience of the private and not-for-profit sectors to increase the supply and diversity of affordable housing across regional and metropolitan WA", said Housing Minister Troy Buswell.

There are many supporters of this new strategy and most people would agree that there is a need to supply more affordable housing options for the future. However, the Government has perhaps overlooked a rather important issue that may thwart their plans: private investors will be dubious about taking on social housing tenants, especially without a strong incentive, and it’s doubtful that the guarantee will be enough.