New NFP Model Could Unlock $1.5 Trillion in Super for Affordable Housing

A new initiative for financing affordable housing in Australia could see Not for Profit community housing providers unlock $1.5 trillion in superannuation.

Housing and finance experts are calling on the government to support an independent finance body that would give housing providers the size and security they need to attract large-scale investment from Australian superannuation funds.

The Affordable Housing Financial Intermediary business case was launched by the UK’s Housing Finance Corporation chief executive Piers Williamson, at the 2016 NSW Affordable Housing Conference in Sydney on Friday.

The conference was told that unlocking superannuation funds for investment in new affordable housing was vital to addressing housing stress in Australia over the next decade.

The intermediary was presented as a vehicle to provide a bridge between the community housing sector and the institutional financial markets, removing the barriers that hamper development.

The proposed model would aggregate the debt of individual housing providers, allowing them to borrow at a scale necessary to unlock investment from superannuation funds at low cost over the long term.

NSW Federation of Housing Associations CEO Wendy Hayhurst said attracting large scale institutional investment was critical to establishing the community housing sector as a third tier of the Australian housing market – between the private property development industry and public housing.

“All governments have made it clear they do not want to take on more debt, so leveraging private funding makes perfect sense,” Hayhurst said.

“Australian super funds have $1.5 trillion tied up in capital. The Not for Profit superannuation sector alone can provide access to $200 billion in investment.

“Submissions from super funds to the Federal Government Affordable Housing Working Group said they were eager to provide a reliable long term funding sources for community housing with Commonwealth support to create the necessary financial structures.

“Countries around the world have embraced non-profit housing as a critical component of a well functioning housing market but it’s a sector that is still under developed here in Australia.

“There’s huge potential for it to grow and be a real solution to housing affordability.”

The business case details the recommended structure, governance arrangements, regulatory settings, and administrative process to establish a Not for Profit financial intermediary in Australia.

The Affordable Housing Financial Intermediary Proposition Paper was developed with funding from the NSW Government’s Industry Development program.