“Please help me. I’ve got nowhere to go, and if I can’t find a place soon, I might lose my job.”
The man was wearing high-vis workwear and had just finished his shift at one of the nearby construction sites. He pleaded with one of our team members to help him find somewhere to live.
This man moved out of his rental property when the rent was increased, and he needed time to find something more affordable. What he thought would be a few weeks staying on mates’ couches had turned into a few months. He had outstayed his welcome with mates and was sick of couch surfing.
It was becoming increasingly difficult to hold it together and the instability was risking his livelihood.
He needed the long-term stability of an affordable home in a market where rents for units in Australia’s capital cities have shot up an average of 17.6% for units in a year and vacancy rates hover around 1% or lower. With no vacancies in our portfolio in the local area, we could only take his details and help him access information on other options.
This scene is playing out every day in the offices of Community Housing Providers (CHPs) like us, government departments and the private sector rental market. The housing system in Australia is broken, particularly those segments of the market catering to very low-to moderate-income households.
According to UNSW City Futures, more than half a million low-income households were not in appropriate housing at the time of the 2021 Australian census, accounting for around one in 15 households.
This isn’t a crisis driven by the disruption of COVID, nor is it a symptom of a cyclical market. The housing ‘crisis’ is a long-term structural problem.
Housing markets are complex and so too are the factors causing the structural problems that result in a growing number of Australians worried about finding or keeping a roof over their head. But whatever the drivers, it is clear we are not producing enough housing that people can afford.
Social housing was once a safety net for those facing life’s challenges, and a springboard for those who simply needed a place they could afford whilst they worked, saved and moved into the market.
But over many decades there has been a steady decline in the supply of social housing. In the past decade, the supply of social housing grew by just 3.2% whilst the overall Australian population grew by 15% during the same period. Social housing dwellings as a proportion of total Australian households has declined over time from 4.9% in 1981 to 4.6% in 2014 and 3.8% in 2021.
To change this trajectory, we need long-term structural reforms that will bring together capital and capability. It is clear that with so many pressures on government expenditure, no single level of government, nor a government of any political persuasion could or perhaps even should seek to solve this problem on its own. In fact, there are decades of evidence that this won’t happen.
Instead, the scale of the challenge requires government contributions to be leveraged by capital from an expanded pool of private investment, and outcomes to be protected by utilising the capability of regulated CHPs.
The creation of the National Housing Finance and Investment Corporation by the previous federal government in 2018 was a significant structural mechanism for community housing providers to catalyze larger-scale institutional investment. This was not a mechanism seeking subsidized investment returns, but rather a means of enabling appropriate, attractive risk-adjusted returns to put private capital to work. Good business that does good.
The Albanese government has now introduced legislation to establish the Housing Australia Future Fund (HAFF). Announced in the 2021 Budget reply, the HAFF is a down payment on further structural reform that will catalyse the scale-up of institutional investment, and more importantly, it can deliver 30,000 social and affordable homes.
The establishment of the HAFF has the potential to be a significant cornerstone of structural reform that enables Housing Australia to mobilise institutional investment to unlock the door to more homes. We have long said that the housing crisis is a problem that is large enough to share and the highly regulated CHP sector, with decades of experience, is uniquely positioned to bring together capital and capability, leveraging government contributions to build more homes.
In established markets, private capital is effectively alleviating housing shortages and these investors are starting to enter Australia. In partnership with SGCH, AXA IM Alternatives is bringing global expertise to the Australian market, giving larger institutional investors such as the superfunds a vehicle to invest with an established and experienced manager.
Similarly, SGCH with Lighthouse Infrastructure is enabling investment. Both these institutional platforms are using the concessions and benefits of regulated not-for-profit community housing to deliver housing that is affordable to essential workers who are earning lower to moderate incomes. But we need a consistent form of direct government backing to enable these investors, and others, to support housing that is affordable to very low- and low-income households. Without direct government support, this sort of social housing is not possible.
There are promising signs that institutional investors want to support more social and affordable housing.
As noted in a number of submissions to Treasury on the Housing Legislative Reform Package, to continue to unlock institutional appetite, competitive returns need to be generated and for this to happen there needs to be certainty of funds being made available by government over a longer term. This gives institutional capital, developers, builders and CHPs the confidence to establish a pipeline and form a functional market for social and affordable housing.
HAFF cannot solve the entire housing issue. It is at least a down payment on reform and a lever ahead of a national plan. But for now, letting perfect be the enemy of good risks blocking the doorway when thirty thousand households could be unlocking the door to a home they can afford delivered by CHPs, and the private sector working together with government.
READ MORE:
Building a vision to solve Australia’s future housing problem
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