The Albanese government has earmarked $350 million towards affordable housing co-investment with super funds and institutional investors.
The funding, due to start in 2024, will kickstart the government's pledge to build one million new "well-located" homes over five years.
The $350 million will be used to entice super funds and institutional investors to invest in social and affordable housing by covering the gap between market rents and subsidised rents.
The government hopes to see 10,000 affordable homes delivered across the nation, including in the regions where housing shortages are most acute.
"This will be delivered through an ongoing funding stream to help cover the gap between market rents and subsidised rents - making more projects commercially viable," Treasurer Jim Chalmers said during his budget speech.
The treasurer said soaring rents were pricing households out of the rental market and forcing people to move further away from job opportunities.
"When I'm talking about affordability, I'm really talking about creating more housing supply in these areas," he told reporters in Canberra.
Budget funding for the housing plan will kick off with $70 million in 2024/25.
Dr Chalmers said the delayed start would not interfere with the backlog of existing construction work still underway, with an immediate start likely to put pressure on a sector already under pressure from labour and material shortages.
Commenting on the new housing plan, shadow treasurer Angus Taylor said it was important to boost housing supply, but superannuation should not be used for the government's pet projects.
"Superannuation is there for people's retirement, a nest egg that they can rely on so that they can have a prosperous retirement," he told reporters in Canberra.
The funding will kickstart the "national housing accord", which should see one million new homes built over five years as per the national agreement brokered between all levels of government, institutional investors and the construction sector.
As part of the accord, state and territory governments have already committed to deliver 10,000 new homes as well.
The budget funding will add to Labor's pre-election housing commitments, which includes a $10 billion Housing Australia Future Fund.
Labor said the fund would deliver 30,000 new social and affordable housing properties in its first five years.
The accord also outlines some long-term ambitions, including freeing up more land for social and affordable housing and building the affordable homes to a high energy efficiency standard.
While any efforts to boost housing supply will help ease housing shortages, the commitments still fall well short of the targets housing affordability groups say are needed.
In its pre-election budget statement, the Everybody's Home campaign called for 25,000 social and affordable homes to be built each year to cover the shortfall.
The construction industry is forecasting a slowdown in house building over the next few years as the industry is pummelled by soaring material and labour prices and rising interest rates.
The Housing Industry Association expects to see 121,320 starts in 2022/23 and 99,330 in 2024/25.
