Tax incentives designed to encourage investors to add to the nation's housing stock in this year's federal budget aim to increase housing supply.
Almost every major housing initiative on offer is designed to encourage new builds rather than purchasing an established home.
The push comes as the nation's population passes 28 million and annual housing construction shortfalls sit at between 55,000 and 80,000 homes. The government's Housing Accord is also running more than a year behind schedule.
The initiatives include investor tax incentives that restrict negative gearing, with investors who purchase or build new homes exempt from this.
Investors and buyers of newly built homes can also still use the 50 per cent capital gains tax discount.
As the pressure on the housing market continues at breakneck speed, builders note that investors are opting for homes that house more than one family.
Mass market builder GJ Gardner Homes confirms that dual occupancy homes, or duplexes, are increasingly popular for families wanting space for extended family to maximise a single block of land.
The push towards new builds to come out of the budget presents opportunities for both investors and first home buyers, Chris Thornton, chief operating officer at GJ Gardner Homes, said.
"Enquiries in our range of duplex designs have grown year-on-year, and we are anticipating a significant rise in enquiries as more investors turn to the design to maximise home equity, cash flow and land yield," Thornton says.
The building firm also expects investors will favour a display home for its guaranteed rental yields and reduced maintenance costs.
"With first home buyers continuing to look for the right timing to enter the market, we expect to see turbocharged enquiries for our Foundations Series over the coming months, following the announcement of the $2 billion Local Infrastructure Fund, combined with the existing four per cent deposit scheme and the Help to Buy shared equity program," Thornton says.
Mass market builder Metricon has also noted new momentum for single-storey duplexes.
Appealing to downsizers and representing a smarter use of funds, duplexes are also fetching higher prices in the current market
"We're seeing a real appetite for smarter, more efficient ways to develop property. Single-storey duplexes answer that call, giving Australians a chance to approach development in a way that's more flexible, affordable and future focused," says Adrian Popple, design director at Metricon.
But the budget did not go far enough in the push to get investors to contribute to new builds.
The Housing Industry Association (HIA) wants a change to the depreciation schedule for new housing.
"A key factor that attracts investors to new home building is the ability to depreciate the investment. They cannot depreciate an established home," HIA chief economist Tim Reardon says.
Accelerated depreciation would improve the attractiveness of investing in newly constructed homes without impacting revenue over the life of the asset.
"Housing investment competes with every other asset class in the economy," he says.
The HIA says limits to negative gearing can disincentivise investment in new homes, leading to fewer homes being built.
It is also calling for the government to ensure the legislation permits all new homes to be negatively geared.
Under the proposed legislation, replacing a home with multiple dwellings qualifies as a new build in most circumstances, but replacing an ageing home with a new detached dwelling generally does not.
"Treating all newly constructed homes as a new home for tax purposes removes additional distortions to the housing market," Mr Reardon says.
