Affordable housing a new asset class picking up speed

Housing projects aimed at essential workers are gaining momentum as developers in eastern Australia expand their capacity and pipelines.

City West Housing has acquired a fourth site in inner Sydney, adding to its $850 million affordable housing pipeline. That includes 933 affordable residences across 20 buildings, most of them within the City of Sydney boundaries, housing 1600 residents and families.

The new site at 20-26 Bourke Road, Alexandria, was acquired from property developer Addenbrooke and is one of four affordable housing projects City West Housing is developing in a strategic cluster around the Green Square transport and infrastructure hub between Sydney Airport and the CBD.

City West Housing affordable developments in Waterloo a

Across the border in Melbourne, HousingFirst, a regulated, not-for-profit social housing venture, has completed a redevelopment of Oakover Road in Preston. It was part of the Public Housing Renewal Program in partnership with Homes Victoria and MAB Corporation.

Twenty-six single-storey social housing dwellings, no longer fit for purpose, were replaced with 99 new social homes that will house up to 140 people.

As well, the City of Melbourne last week said it will transform two council-owned sites into new affordable housing, in an effort to combat the city’s housing crisis.

With affordable rental housing an emerging asset class, City West Housing will also be looking to the Housing Australia Future Fund and third-party investors for funding support

City West Housing CEO Leonie King

City West’s site in Sydney is part of Green Square, a 10-year project to create a 278-hectare precinct south of the city’s centre.

Affordable housing provides dwellings for low-income workers, essential workers, which includes firemen, paramedics, garbage collectors, cleaners, and mothers and children escaping domestic violence. It includes a range of single- or multi-bedroom units, houses and studio apartments.

The Federal Government has committed to delivering 10,000 new affordable homes over five years from 2024 under a National Housing Accord to address an accommodation crisis. State governments also have a variety of policies. Last November the Albanese government established the Housing Australia Future Fund (HAFF), a dedicated affordable housing investment vehicle.

City West, an affordable housing developer and operator, has plans to keep growing.

The group sold a 2252 square metre block at 74-88 Botany Road, Alexandria and will use the cash to unlock capital for its $500 million affordable housing pipeline focused on Green Square.

City West chief executive Leonie King said affordable build-to-rent developments are being funded with equity, debt, government grants and subsidies, including affordable housing developer contributions levied through the City of Sydney.

Melbourne inner councils such as Port Phillip are considering a new scheme that could boost their stock of affordable rental housing.

“With affordable rental housing an emerging asset class, City West Housing will also be looking to the Housing Australia Future Fund and third-party investors for funding support,” King said.

Rents will be capped at 30 per cent of a combined household’s income, ensuring that people on very low to moderate incomes have safe, secure affordable housing and can live close to where they work. King said 64 apartments were originally approved on the Botany Road site compared to the 150 affordable residences in what will be called Banksia Apartments.

“The significant value we captured on Botany Road, combined with a competitive purchase price for Bourke Road, means we can house up to 86 more low-income working households into a part of the city where housing demand is extremely high,” she said.

“It will also help us to finance the ever-increasing development costs for all our pipeline projects in the City of Sydney.”

NSW Housing and Homelessness Minister Rose Jackson said “The cost of living has never been so high in Sydney and surrounds and so it’s great to see affordable housing providers such as City West Housing expand out of Sydney so more people can benefit,” Ms Jackson said.
It’s clear that we need real solutions and we need them now and these project is one of those solutions that will benefit those who need it most.”

Other sites also around Green Square include the Acacia project with 250 units, the Bangalay project of 104, and the Boronia project with 74 affordable apartments and Banksia with 150 affordable apartments.

Melbourne City Council’s affordable housing strategy sets an ambitious target to deliver up to 25 per cent of affordable housing on council land to address the current 6000-home shortfall, which is set to increase to 23,000 by 2036.

About 2600 square metres of land is proposed to be converted into multi-unit affordable housing on Curzon Street in North Melbourne and Victoria Street in West Melbourne, including provision for key workers, Indigenous peoples and older women.

Construction of the City of Melbourne’s landmark Make Room project will be completed in August, which repurposes a council-owned building at 602 Little Bourke Street into transitional supported accommodation.

Melbourne Lord Mayor Sally Capp said that in a housing crisis “every home that becomes available matters”.

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