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).


Leave a Comment:



Bond markets to help affordable housing crisis

Real estate outlook: positive returns expected in challenging year

Real estate social infrastructure coming of age


Most viewed in recent weeks

Lessons when a fund manager of the year is down 25%

Every successful fund manager suffers periods of underperformance, and investors who jump from fund to fund chasing results are likely to do badly. Selecting a manager is a long-term decision but what else?

2022 election survey results: disillusion and disappointment

In almost 1,000 responses, our readers differ in voting intentions versus polling of the general population, but they have little doubt who will win and there is widespread disappointment with our politics.

Now you can earn 5% on bonds but stay with quality

Conservative investors who want the greater capital security of bonds can now lock in 5% but they should stay at the higher end of credit quality. Rises in rates and defaults mean it's not as easy as it looks.

30 ETFs in one ecosystem but is there a favourite?

In the last decade, ETFs have become a mainstay of many portfolios, with broad market access to most asset types, as well as a wide array of sectors and themes. Is there a favourite of a CEO who oversees 30 funds?

Betting markets as election predictors

Believe it or not, betting agencies are in the business of making money, not predicting outcomes. Is there anything we can learn from the current odds on the election results?

Meg on SMSFs – More on future-proofing your fund

Single-member SMSFs face challenges where the eventual beneficiaries (or support team in the event of incapacity) will be the member’s adult children. Even worse, what happens if one or more of the children live overseas?

Latest Updates


'It’s your money' schemes transfer super from young to old

Policy proposals allow young people to access their super for a home bought from older people who put the money back into super. It helps some first buyers into a home earlier but it may push up prices.

Investment strategies

Rising recession risk and what it means for your portfolio

In this environment, safe-haven assets like Government bonds act as a diversifier given the uncorrelated nature to equities during periods of risk-off, while offering a yield above term deposit rates.

Investment strategies

‘Multidiscipline’: the secret of Bezos' and Buffett’s wild success

A key attribute of great investors is the ability to abstract away the specifics of a particular domain, leaving only the important underlying principles upon which great investments can be made.


Keep mandatory super pension drawdowns halved

The Transfer Balance Cap limits the tax concessions available in super pension funds, removing the need for large, compulsory drawdowns. Plus there are no requirements to draw money out of an accumulation fund.


Confession season is upon us: What’s next for equity markets

Companies tend to pre-position weak results ahead of 30 June, leading to earnings downgrades. The next two months will be critical for investors as a shift from ‘great expectations’ to ‘clear explanations’ gets underway.


Australia, the Lucky Country again?

We may have been extremely unlucky with the unforgiving weather plaguing the East Coast of Australia this year. However, on the economic front we are by many measures in a strong position relative to the rest of the world.

Exchange traded products

LIC discounts widening with the market sell-off

Discounts on LICs and LITs vary with market conditions, and many prominent managers have seen the value of their assets fall as well as discount widen. There may be opportunities for gains if discounts narrow.



© 2022 Morningstar, Inc. All rights reserved.

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. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). 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.

Website Development by Master Publisher.