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

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Latest Updates


Stop treating the family home as a retirement sacred cow

The way home ownership relates to retirement income is rated a 'D', as in Distortion, Decumulation and Denial. For many, their home is their largest asset but it's least likely to be used for retirement income.


Residential Property Survey Q3 2021

Housing market sentiment has eased from record highs and confidence has ticked down as house price rises slow. Construction costs overtook lack of development sites as the biggest impediment for new housing.


Hey boomer, first home buyers and all the fuss

What is APRA worried about? The ‘average’ mortgagee can easily absorb increases in interest rates without posing a systemic threat to the banking system. Housing lending is a relatively risk-free activity for banks.

Investment strategies

Personal finance is 80% personal and 20% finance

Understanding your own biases and behviours is even more important than learning about markets. Overcome four major cognitive biases that may be sabotaging your investing and recognise them in others.

Where do stockmarket returns come from over time?

Cash flow statements differ from income statements and balance sheets, and every company must balance payments to investors versus investing into the business. Cash flows drive the value of the business.

Fixed interest

How to invest in the ‘reopening of Australia’ in bonds

As Sydney and Melbourne emerge from lockdown, there are some reopening trades in the Australian credit market which 'sophisticated' investors should consider as part of their fixed income portfolios.


10 trends reshaping the future of emerging markets

Demand for air travel, China’s growing middle-class population, Brazil’s digital payments take-up, Indian IPOs, and increased urbanisation are just some of the trends being seen in emerging economies.



© 2021 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.