Leaders from business and government have called for financial incentives and the establishment of a task force to encourage big institutions to invest in affordable rental housing.
A panel of 23 senior executives, from organisations such as Westpac, NAB, Australian Super and the Property Council of Australia, was brought together by academics at UNSW’s City Futures Research Centre and the University of Sydney to develop recommendations on how to make investment in affordable housing viable for major investors.
The resulting report has been published by the Australian Housing and Urban Research Institute, which funded the study at the request of state and federal housing ministers.
The panel says investment opportunities of a minimum of $500 million per annum are required to create liquidity and stimulate a market in a rental housing asset class. The demand is big enough but investment opportunities are not being pulled together to create the scale needed for institutions, according to a panel member.
Housing supply bonds, residential investment trusts and freeing up appropriately located government land for rental housing developments are some of the ideas put forward by the panel.
The panel also called for all governments to send a strong signal to the market that recent financial incentives, especially the National Rental Affordability Scheme, introduced in 2008, will be continued. “Continuity of this scheme is essential to convince institutions that their effort to enter this new market will be worthwhile,” says the report's first author, Associate Professor Vivienne Milligan, from UNSW's Faculty of Built Environment.
“Without this certainty, panel members were deeply concerned that the momentum that has been building to unlock institutional finance for rental housing will be lost,” she says.
The recommendations include a task force to be established to carry on the momentum generated from the panel. Its job would be to advise governments on how to kick-start the market and get the best solutions for the long term.
“If the recommendations were carried out, it would result in a reliable long-term pipeline of demand for housing finance, that would allow institutional investors and the housing industry to gear up at a scale that would not only make positive inroads into the rental housing shortage, but would also provide a key positive driver to economic activity,” says one of the panel members, former Senior Vice President of the Commonwealth Bank of Australia, Philip Frost.
“It would enable institutional investment into rental housing as an asset class, and thereby provide a new and deep source of investment funding for an asset class that has to date relied on private individual investment,” he says.
The full report has been published by AHURI.
Media contact: Susi Hamilton, UNSW Media, 0422 934 024