Industry Super Australia (ISA) and the Association of Superannuation Funds of Australia (ASFA) have welcomed the passage of the government’s Housing Bills as an important step towards increasing the supply of affordable housing while providing new investment avenues for institutions.
The $10 billion Housing Australia Future Fund (HAFF) is expected to support a pipeline of some 30,000 social and affordable dwellings over the next five years, including 4,000 homes for women and children impacted by family and domestic violence and older women at risk of homelessness.
Presently, just 4 per cent of Australia’s housing stock is classified as affordable, giving Australia the lowest proportion of social housing among OECD nations – even though public spending on housing allowances is at the OECD average.
It will also include $200 million for the repair, maintenance and improvement of housing in remote Indigenous communities and $30 million to build housing for veterans who are experiencing homelessness or at risk of homelessness.
The package of housing legislation passed by the Parliament also includes the National Housing Supply and Affordability Council Bill 2023, which will establish the National Housing Supply and Affordability Council as an independent statutory advisory body.
According to ISA, the amendments agreed to, and extra investment secured through negotiations, improve investability for super funds, through guaranteeing recurrent expenditure and ensuring indexation of HAFF distributions available to support long term investment in new social and affordable dwellings.
“Today’s passage of the Housing Bills provides much needed certainty to super funds who are looking to invest at scale in social and affordable housing,” said ISA deputy chief executive, Matt Linden.
“Funds can now proceed with confidence to assess project pipelines and assess how to deliver good risk-adjusted returns to members, while investing in critically needed new housing supply.”
ISA had previously voiced its support for the measure in March in its submission to the Senate economics legislation committee inquiry.
It added that, by removing the market and regulatory hurdles that have inhibited private investment to date, the HAFF, the National Housing Accord, and associated reforms can help reverse a decades-long shortfall in housing-sector investment by institutional investors.
“As the proportion of members approaching retirement increases, funds will look for asset classes that deliver stable cash-based returns. The affordable housing sector – backed by recurrent annual funding supported from the HAFF – is well-placed to meet that need,” Linden said.
ASFA noted the new measures include increasing the government-guaranteed liability cap of housing bonds.
“Superannuation funds are investing in bond issuances used to fund affordable housing and an increase in the level of bonds on issue will encourage further investment,” said ASFA deputy chief executive, Glen McCrea.
ASFA also welcomed a report last week by the National Housing Supply and Affordability Council on the barriers to institutional investment in housing, following consultation with stakeholders including ASFA.
It pointed out the numerous barriers to increased investment in housing by super funds and explored policy options to address these and develop a market for institutional housing more commonly seen in overseas jurisdictions.
“Almost twelve months ago to the day, ASFA held a roundtable with government to begin a dialogue on these important issues. We are encouraged by the progress that is being made and we look forward to continuing to work with government to create pathways for investment in superannuation fund members’ best financial interests,” McCrea added.
Last year, Cbus committed up to $500 million over five years to the HAFF as part of the National Housing Accord.
More recently, HESTA announced work had started on an innovative build-to-rent (BTR) apartment development in Melbourne’s inner west with specialist affordable housing fund manager Super Housing Partnerships, the first in a pipeline of such projects aimed at increasing the supply of affordable and social housing.
