The federal government has doubled its affordable housing target significantly by aiming to build 100,000 affordable rental homes instead of the pre-election promise of 50,000. The move came after research showed that more than one million low- and middle-income families are experiencing housing stress as they spend approximately one-third of their income on rents or mortgages.
"This doubling of the number of affordable rental properties to be built under the scheme reflects the severity of the housing affordability problem in Australia," Prime Minister Kevin Rudd said in a statement.
Under the National Housing Affordability Scheme, the government will offer private investors tax credits of $6,000 a year for 10 years for new properties that are rented at 20% below the current market rate. In addition, states and territories will provide $2,000 per home either in cash payments or in kind, such as provisions of cut price land or concessions on stamp duty.
Rudd said the initiative would reduce rents on a new average three-bedroom unit to $280 from $350 a week - a saving of $70.
The government will also invest up to $30m to streamline the electronic development assessments and application services. "Currently the delays in planning approvals create 'holding costs' such as interest and land taxes, which the housing industry says push up the price of new homes," said Rudd. "The program will reduce costs and development times, thereby reducing the costs ultimately passed on to homebuyers."
Affordability levels in Australia have deteriorated by 2.2% over the last three months to December 2007, according to REIA. Borrowers now need 37.4% of the family income to meet average mortgage repayments - the highest level reached in the 22 years that REIA has tracked affordability data. Renters are not immune either, with 24.8% of their income going towards rent.
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