Junction unveils new affordable housing vision

Social enterprise Junction is in talks with offshore investors to back an ambitious growth plan targeting 2000 new social and affordable homes.

Junction chief executive Maria Palumbo and chair Rob DiMonte at Junction's $37m affordable apartment development under construction at Tonsley. Picture: Sarah Reed

Social enterprise Junction is in talks with offshore and institutional investors to back an ambitious plan to develop 2000 new social and affordable homes by the end of the decade.

The organisation has revamped its strategy and unveiled a new 2030 Vision, in response to the deepening national housing crisis and new federal measures to increase the supply of social and affordable housing across the country.

A central plank of the strategy is to turbocharge the development of affordable build-to-rent accommodation across Adelaide, and Junction is hoping to secure investment from specialist and offshore funds, and potentially local superannuation and insurance funds, to bring its vision to life.

Junction chief executive Maria Palumbo said the affordable build-to-rent model had proven a success in places like Canada and Singapore, and she saw an important role for Junction and other community housing providers to stimulate growth in Australia. “There’s a lot of scepticism in Australia about it (built-to-rent) working, but there’s other countries that make it work,” she said.

Artist’s impression of Junction’s affordable apartment development at the Tonsley innovation precinct. Picture: Junction

“There’s a lot of offshore funds that are interested, and what this is about is creating a structure that makes their transaction as simple as possible. They need scale transactions. I see us as the bridge between investors, developers and government, and then having ourselves as a tax-incentivised organisation that puts those things together.

“And then the social element around placemaking and community development — we think it’s a good package that we can offer.”

Ms Palumbo said that while Australian super funds had been pondering the merits of investing in build-to-rent developments for several years, the model was emerging as a promising alternative for those unable to secure home ownership.

And rather than tinkering with changes to negative gearing and capital gains tax, she said institutional investment in the build-to-rent sector could work side-by-side with the mum and dad investor market to increase the supply of rental accommodation.

“The percentage of households that won’t get home ownership will sit on 30 per cent, and at best will hold it there,” she said. “The mum and dad investor market can’t meet the needs of 30 per cent of households. So what we’re trying to replicate is if you can’t be in home ownership what can we have as a model that replicates as closely to home ownership as you’re going to get?

“And that is tenure stability, that is not wanting to realise the asset as a capital return, that’s wanting to retain the asset over 40 years so that it’s a stable place that you can do life, stay there, live there.”

Junction, which employs close to 400 staff, up from 250 four years ago, has several social and affordable housing projects under development, including a $36m apartment project at the Adelaide suburb of Tonsley, which is being supported with a $15.2m grant from the federal government’s Social Housing Accelerator Program.

A joint venture with Housing Renewal Australia and the SA Housing Authority is planning another 700 new homes at a $200m development at nearby Oaklands Park, which is slated to become the state’s largest social housing project in decades.

Ms Palumbo said the future pipeline would be focused on infill developments and higher density housing along major roads and public transport centres, in line with the state government’s Greater Adelaide Regional Plan.

Junction is also trialling an alternative approach to traditional housing at its Tiny Homes campus in Adelaide’s south, where it is delivering 10 compact, modular homes to support young people aged between 16 and 18 who are transitioning out of the care system.

Junction chair Rob DiMonte said the concept reflected the organisation’s investment in new innovations to help more vulnerable people find housing.

“Innovation in terms of the build, thinking about modular builds and off-site manufacturing, from a cost point of view, speed point of view and quality point of view, is part of the solution (to boosting housing supply),” he said.

“There has to be innovation to deliver the housing pipeline within an appropriate time frame.”

Originally published as Junction unveils new affordable housing vision