06 June 2012
Bonds could ease rental crisis
Housing bonds could be used to fund affordable rental housing, according to a report by the Australian Housing and Urban Research Institute.
The report's lead author, Dr Julie Lawson, a Senior Research Associate in the School of Global Studies, Social Science and Planning at RMIT University, said the 100-page report provided government and the finance industry with a financial instrument and strategy to achieve this.
Dr Lawson said the proposal for a suite of housing bonds for institutional, retail and public investors had been developed with international experts, Australian investment industry leaders, housing providers and government officials.
She said that estimates from Australia's National Housing Supply Council suggested that up to 20,000 new affordable dwellings were needed each year for the next 10 years, just to retain a modest 5 per cent share of social and affordable stock.
"The cost of meeting this is about $7 billion per year," Dr Lawson said. "Until now, a critical issue has been how to channel substantial levels of investment towards the affordable segment of the housing market and, in particular, serve the needs of lower-income tenants.
"This concrete proposal shows how conditional public subsidies, private housing supply bonds, a special purpose intermediary and regulated not-for-profit providers can be used to address the growing need for affordable rental housing.
"In Austria over the past 20 years housing bonds have generated $20 billion of investment in new affordable housing and the renovation of older social housing."
Dr Lawson said Austrian housing bonds had helped reduce mortgage interest rates, support housing market stability and expand social housing.
"Ideally, long-term institutional investors would make the best partner for affordable housing providers, such as superannuation funds, which in Australia hold $1.3 trillion in funds, a sum anticipated to grow to $3.2 trillion by 2035," she said.
The study research team also included Dr Vivienne Milligan (UNSW) and Dr Judy Yates (University of Sydney), with Austrian collaborators from the Institute for Real Estate Construction and Housing (IIBW) and the Erste Bank, as well as local industry partner Affordable Housing Solutions.
Dr Julie Lawson.