AUSTRALIA is not providing enough incentives for global investors to invest in social housing, unlike other countries such as the United Kingdom where 70% of capital to build affordable housing is sourced from private financing.
According to new research from the National Housing Finance and Investment Corporation (NHFIC), which looked at data from US, UK, Canada and select European countries, nations with long-standing government support see prominent and growing institutional and private finance investment in social and affordable housing.
Government policies such as guarantees, enduring subsidies, or public and private loan intermediation, which help reduce the funding gap, enable private investment into subsidised housing.
Both the UK and the US were seen to have greater inflows of investment into such housing, compared to countries like Australia and Canada, with increased investment in the former to driven in no small part by large institutional investors.
The UK has seen around 70% of the capital to build affordable housing is sourced from private financing, compared to from 30-40% in the 2000s.
Likewise in the US, institutional investment in subsidised housing has grown significantly, with annual transaction volumes coming in at around $US36 billion in 2021, compared to $US1.3 billion in 2011.
Despite this, like Australia, both countries are experiencing a surge in homelessness.
The research report reaffirms the National Housing Survey findings that social and affordable housing provide benefits for the community.
A Housing For All Australians (HAA) report, Give Me Shelter, found that the national average benefit-cost ratio (BCR) for Australia in providing adequate social and affordable housing infrastructure is 2:1.
In other words, for every $1 invested to drive the delivery of public, social and affordable housing, the Australian community saves $2 in future costs.
This rate of return is comparable to, or better than, those achieved in many other major investments in infrastructure including Melbourne Metro (1.5:1) and the M12 Motorway Sydney.
With the UK expected to see its homeless population grow to more than 300,000 households on any given night in 2023, according to Crisis’ Great Britain Homelessness Monitor report.
While in the US, 582,462 people were experiencing homelessness in December 2022, according to HUD.
The Property Council of Australia welcomes the research from NHFIC, saying it supports the immediate passage of the Australian Government’s legislative agenda, currently before the Senate.
“Australia faces a stark reality; we are not planning for, or supplying, enough homes across the housing spectrum. Gateway reforms like the Housing Australia Future Fund and National Housing Supply and Affordability Council must pass the Australian parliament without delay,” said Mike Zorbas, chief executive at the Property Council.
“Our reputation for welcoming housing investment must be on par with the UK and US as this report highlights. We need to level the playing field for new build-to-rent housing, purpose-built student accommodation and retirement living communities,” he said.
