Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 194

Institutional investment in affordable housing one step closer

The recent announcement by the Treasurer, Scott Morrison, to establish an Affordable Housing Implementation Taskforce to develop an affordable housing bond aggregator model is welcome news for affordable housing.

In a December 2016 Cuffelinks article, I set out how a bond aggregator model could work. The Australian Housing and Urban Research Institute (AHURI), which is funded by Federal and State Governments and leading Australian universities, has for years been advocating that a bond aggregator model is needed in Australia.

On the Treasurer's recent visit to the UK, he met with leading institutional investors who are providing debt via investing in bonds issued by the UK Housing Finance Corporation (THFC). They are also providing development and investment loans directly to community housing providers. Some of these institutions are investing equity into affordable housing projects. No doubt the Treasurer was encouraged to see the depth of institutional commitment to a more efficient mechanism to fund and build affordable housing.

Superannuation slow to invest in housing

Unlike their UK, US and European counterparts, Australian superannuation funds have been slow to embrace investing in affordable housing. It's therefore heartening to see a range of positive responses to the Treasurer’s announcement that an Affordable Housing Implementation Taskforce (comprising federal Treasury Secretary John Fraser, former chief executive of the NSW Treasury Corporation, Stephen Knight, and Chief Executive of the Community Housing Industry Association, Peta Winzar), has been tasked with devising a plan to establish a new financial intermediary. It should attract private sector investment in new affordable housing via issuing bonds allowing community housing providers access to cheaper and longer-term debt.

The Chief Executive of the $37 billion health industry superannuation fund HESTA, Debby Blakey, said in a recent interview:

“We believe the government has an important role to play to facilitate and co-ordinate investment in social housing. The government can play an active role in developing a housing bond aggregator so institutions like HESTA can invest in them. It might be through long-dated bonds which would have an attractive income or some government guarantee on the rental return of social housing projects; long-dated bonds with terms from 15 to 20 years that had a good income would be very attractive to a fund like HESTA.”

Large-scale investment critical

In the UK, the THFC has an enviable track record. From an investors’ point of view it has issued more than £5 billion in bonds with a stable ‘A’ credit rating from Standard and Poor's and a zero default rate. But most importantly from a community perspective, it has assisted in the financing of more than 2.4 million dwellings through regulated housing associations that provide secure affordable housing.

Lending support to a similar local initiative, Wendy Hayhurst, CEO of the NSW Federation of Housing Associations said:

“… affordable housing policies must move beyond reducing pressure on real estate prices to include solutions for renters and lower income earners. Attracting large-scale institutional investment is 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.”

Housing underpins everything

It is incumbent on all levels of government, the community housing providers and the institutional sector to come up with a package of tools that addresses making it easier and more affordable to either buy or rent a house. As Kasy Chambers, Anglicare Australia Executive Director said:

“Housing underpins everything, whether health, education and general wellbeing, and there is no doubt there is a crisis in housing in Australia.”

However, the affordable housing bond aggregator model is one component of the affordable housing solution.

 

Adrian Harrington is Head of Funds Management at Folkestone, an ASX-listed real estate fund manager and developer, and he is one of the Federal Government’s representatives on the Australian Housing and Urban Research Institute (AHURI).

  •   16 March 2017
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

Bond markets to help affordable housing crisis

Real estate outlook: positive returns expected in challenging year

Real estate social infrastructure coming of age

banner

Most viewed in recent weeks

2 billion reasons to fix retirement income

A proposal to address Australia's 'stranded balances' in retirement by requiring super funds to transition members to pension phase at 65, boosting retirement income and reframing super as a source of income.

The ultimate superannuation EOFY checklist 2026

Here is a checklist of 28 important issues you should address before June 30 to ensure your SMSF or other super fund is in order and that you are making the most of the strategies available.

Do super funds need a massive wake up call?

UK retirement expert, Guy Opperman, believes super funds are failing at supporting members in deaccumulation. Here is what Australia should do about it. 

Two months into retirement

A retirement researcher's take on retirement and her focus on each of her six resource buckets to stay engaged during the transition and beyond.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

Reforming the taxation of wealth and wealth transfers

As the budget approaches debate continues about the need and method for addressing wealth inequality. Could reinstating wealth transfer taxes be the answer?

Latest Updates

Back to the future - Why indexing CGT is a good idea

A return to indexation of capital gains would be a fairer way to compensate households for the effects of inflation than the current discount. Importantly, it opens the door to future, broader reforms to stop the taxation of inflation.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Strategy

The folly of the Iran war

From oil shocks to fractured alliances, the Iran war carries the hallmarks of a historic policy misstep - one that could tip an already fragile global economy into crisis.

Taxation

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Investment strategies

The red metal's long game

Copper has had a rough few weeks but investors should not ignore the potential for future price increases as supply increasingly falls behind demand.

Taxation

The lesser-known effects of changed property taxes

The budget’s property tax reforms are being framed as fairness measures, but they risk splitting the housing market, penalising lower‑income investors and introducing distortions that may prove costly.

Latest from Morningstar

Why stocks sometimes fall for no obvious reason

The vast and opaque world of private assets is a powerful gravitational force - and when trouble hits, it's the more liquid public equities that often the feel it first.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.