The Government has just announced it has signed contracts to build the first 800 social and affordable homes from its $10 billion Housing Australia Future Fund (HAFF). New supply of housing is good but how significant is it?

The average number of homes, per month, approved for construction in Australia is 14,058.

So 800 is nowhere near enough to make a real difference to supply.

But this is just the first announcement from the HAFF. The government has claimed that the HAFF will build 55,000 homes over 5 years. That sounds a lot better, right? Well assuming everything goes to plan and all those homes get built in that time period, that would be an average of 917 per month. Almost the same as the 800 that have just been announced.

Building more homes is good but the HAFF is just a drop in the bucket. By itself it is not going to make much of a difference. If the government wants to really tackle housing affordability, one of the biggest issues Australia is facing, then it is going to have to do a lot more.

The $10 billion HAFF is also tiny compared to the size of tax concessions that are pushing up house prices. Last year, the Parliamentary Budget Office calculated that the costs of negative gearing and the capital gains tax discount for investment properties would cost over $12 billion in this financial year alone, and just under $56 billion over the 5 years that the HAFF is expected to last – of which $40 billion will go to the richest 10% in Australia.

The HAFF is a very small step to solve a very big problem. More needs to be done or Australia’s housing will continue to get further out of reach.