Super industry welcomes policy to increase institutional investment in housing

Alison Banney 11 April 2017

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Government to follow the UK’s approach to increase supply in social and affordable housing in Australia.

In his address to the Australian Housing and Urban Research Institute, Treasurer Scott Morrison spoke of the government's plans to introduce a policy allowing greater institutional investment in private housing.

The superannuation industry has been quick to welcome such a policy, agreeing this is a step in the right direction to solving Australia’s housing affordability crisis. Comparatively, the super industry opposed the government's potential policy to allow first home buyers to dip into their super to fund a house deposit.

Morrison said the UK has a far greater social and affordable housing sector, and the policy would look at how Australian rented residential real estate can be better structured to provide better opportunities.

"18 per cent of stock in the UK is owned by social housing providers, more than three times Australia's proportion. Here, our private rental stock is owned by mums and dads," he said.

"I agree that the creation of a housing association sector in the UK has, within budgetary constraints, allowed a larger affordable rental sector to emerge which would not have developed with councils alone, and that the sector has been robust, resilient and innovative in housing delivery.

"The Government is establishing a taskforce to look at harnessing large-scale private investment through a bond aggregator concept. The bond aggregator would issue bonds to the market, and on-lend these funds to community housing providers - allowing them to access cheaper and longer term finance."

CBUS, industry super fund for construction and building, chief executive David Atkin welcomes the plans.

"We were encouraged by the Treasurer’s recent decision to establish an Affordable Housing Implementation taskforce that will consider the issues but we are calling on the Government to go a step further and make concrete commitments in the upcoming Federal budget," Atkin said.

"One of the biggest problems with housing affordability in Australia is supply - we need to build more houses. Cbus stands ready to invest in this critical infrastructure but the Federal Government needs to get the policy settings right to make those investments sustainable."

Industry Super Australia director of public affairs Matt Linden also announced his support of the policy.

"Providing greater opportunities for institutional investment - such as industry super funds - to increase affordable housing supply is a step in the right direction," he said.

"Tackling the housing affordability crisis should rightly be a top priority with the policy focus being on increasing supply though land release, regulation and reviewing tax subsidies that fuel investment.

"Industry super funds are willing investors in affordable housing where returns are viable and welcome suggestions of creating new opportunities for institutional investment."

The treasurer acknowledged allowing greater opportunity for institutional investment in private real estate was only one part of the solution.

"Of course, if found to be viable, a housing bond aggregator is only a part of the solution. A variety of complementary reforms are required to increase the supply," he said.

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