The upcoming Federal Budget is an opportunity for the government to tackle the housing crisis by boosting construction and making it easier for people to ‘right-size’.

LJ Hooker Group wants the budget to include measures such as encouraging older homeowners to downsize to help free up more homes, a Defence Housing Australia (DHA) style housing scheme and incentives for homeowners to build secondary dwellings on their properties.

LJ Hooker Group’s Head of Research, Mathew Tiller, said the upcoming Federal Budget presented an opportunity to tackle the imbalance of demand and supply, that is behind the surge in dwelling prices and rents.

“While State Government stamp duty remains a significant obstacle to relocation, the Federal Government can provide and expand incentives, particularly for older Australians, to sell and downsize,” Mr Tiller said.

Mr Tiller said extending the timeframe for downsizing could help older homeowners.

“The budget could extend the exemption of home sale proceeds from pension asset testing from 12 months to 24 months,” he said.

“This extension would provide pensioners with more time to transition into their next home without affecting their pension.”

He said downsizer contributions could be another option.

“The government can broaden the eligibility criteria for downsizer contributions to superannuation by lowering the minimum age requirement from 60 to 55 years,” he said.

“This initiative allows individuals to make a one-time, post-tax contribution of up to $300,000 per person from the proceeds of selling their home.” 

Importantly, both members of a couple could make contributions that would not count towards non-concessional contribution caps, Mr Tiller said.

“By expanding these measures, the government can encourage more homeowners to downsize, thereby freeing up housing stock and promoting better housing outcomes for all,” he said.

Mr Tiller said another innovative option would be to replicate the DHA model used by military members.

“Housing could be provided to essential workers, low-income earners and even crisis accommodation by adopting the same model used by DHA,” he said.

“This scheme, introduced in 1988, provides secure and quality-controlled homes to defence members and their families. 

“The DHA’s latest annual report shows they have more than 16,000 properties under management, 70 per cent are owned by private investors. 

“These are then leased to the DHA and provide accommodation for defence staff.

“DHA leases property from private investors for three, six, nine or 12-year terms and guarantees the rental income over this period.”

He said such a scheme would provide long-term rental solutions for key workers and their families.

The government could then set the rent, and manage the properties to ensure quality accommodation is provided.

Mr Tiller also said that the Federal Government could directly fund and finance the construction of new homes.

He said they could also incentivise people by introducing a secondary home incentive program. 

Under this initiative, homeowners would be eligible for grants and incentives to construct secondary dwellings, such as granny flats or backyard homes, on their properties.

Finally, he said he would like to see an increase in capacity for the residential housing construction industry, with more focus on education and training.