State and federal treasurers unanimous on housing affordability options
05 Dec 16
State and federal treasurers have unanimously supported recommendations from the Affordable Housing Working Group to address rental affordability for 1.3 million low income rental households.
The Working Group’s report outlined new rental financing models and recommended a bond aggregator aimed at improving the supply of affordable housing for low income families.
The CEO of PowerHousing Australia – which represents 28 of Australia’s largest community housing providers (CHPs) – Nicholas Proud said the unanimous support of the report by treasurers highlights a new agenda.
“The treasurers’ agreement to implement these recommendations is a critical step towards improving rental settings for those 552,000 lower income Australians living in rental stress,” Proud said.
“Having the ability for CHPs to aggregate their financing through a bond aggregator is critical to taking pressure off state housing budgets and reducing the cost of capital for housing for those on low incomes,” Proud said.
Proud explained that the bond aggregator had the potential to further securitise finance for housing, which reduces the cost of ongoing finance and in turn, reduces costs associated with producing and maintaining housing for low income families. “It’s a win for governments and low income Australians,” he said.
Andrew Cairns, CEO of Australia’s not-for-profit banking specialist Community Sector Banking, welcomed the report, saying, “the findings clearly validate our long held view that Australia needs a new approach to increase investment in social and affordable housing.”
“It confirms that we need to release more capital to stimulate growth in affordable housing, and work towards creating a structure that supports private and public investments. It also recognises the need for all parties to come to the table to solve the housing affordability crisis, not just the private sector, but also government, not-for-profits and financial services,” said Cairns.
Cairns said that “if the report’s recommendations are implemented and we see enhanced government support for a social housing bond, it could reduce the cost of capital for affordable housing projects. Due to the fixed and long term tenor of a bond, the amount of debt servicing required by a CHP is reduced. This frees up capital that can be further leveraged to increase supply of new housing – most importantly, it could provide more safe housing for the growing number of Australians being shut out of our increasingly unaffordable housing market,” he said.
The Affordable Housing Working Group’s report acknowledges the capacity of the CHP sector to share with government the challenge of tackling rental housing stress.