Affordable housing needs private investment

Given the scale of the need for the development of additional affordable housing, it is only through increased private sector investment that any significant progress can be made.

While there are several barriers and risks that need to be overcome, the main impediment to greater private sector involvement is the ‘financing gap’.

The financing gap is ‘the difference between the costs of delivering new supply of affordable housing (such as the costs associated with acquiring new stock, managing tenancies, dwelling maintenance and depreciation) and the income received from the concessional rents paid by the tenants.

It was largely with a view to helping to close the financing gap for community housing providers and encouraging private investment in social and affordable housing that the National Housing Finance and Investment Corporation (NHFIC) was established.

Whilst NHFIC together with states' post COVID construction programmes have contributed to a modest increase it has failed to make a significant contribution to addressing Australia’s social and affordable housing shortfall.

The industry is awaiting the hopeful passing in October of the delayed Housing Australia Future Fund Bills to give some certainty and detail around government funding.

In the meantime, the question of how the private sector can develop affordable housing without government payments remains.

part attribute Commonwealth of Australia