Community Chest: The new sector that will provide solutions to the housing crisis
Australia’s housing crisis has reached a critical juncture, with demand for social and affordable housing vastly outstripping supply. Yet at the recent FuturePlace Living Sector Summit, a sense of cautious optimism emerged as industry leaders, policymakers, developers, financiers, and community housing providers united to forge a path forward through innovation, collaboration, and policy reform.
The scale of the challenge is daunting: over 190,000 households desperately need social housing, while the National Shelter and SGS Economics and Planning 2024 Rental Affordability Index reveals unprecedented affordability lows across major capital cities and regions. As low-income renters buckle under soaring rents, the Summit crystallised a vital message: solutions lie within reach if stakeholders can orchestrate their efforts across four critical domains: supply acceleration, partnership development, funding innovation and policy certainty.
At the heart of these solutions, scaling up housing supply emerged as the foremost priority. Industry experts emphasised that a three-pronged approach – streamlining planning approvals, simplifying funding processes, and embracing innovative construction methods – could dramatically accelerate delivery timelines and boost housing stock.
The power of collaboration resonated throughout the Summit. Participants emphasised the imperative to transcend traditional transactional relationships, instead fostering deep, enduring partnerships between government entities, private developers, CHPs and institutional investors. This collaborative framework demands shared objectives, sophisticated risk-sharing mechanisms, and sustained communication – essential elements for achieving transformative housing outcomes at scale.
The Waterloo South Estate redevelopment stands as a compelling testament to partnership’s potential. This groundbreaking collaboration between Stockland, three CHPs – CityWest Housing, Link Wentworth, and Birribee Housing – and the NSW Government’s Homes NSW exemplifies urban renewal at its most ambitious. Set to deliver over 3,000 apartments with half dedicated to social and affordable housing, the project demonstrates how aligned values can create vibrant, inclusive communities.
Despite these advances, financing remains a formidable challenge. While construction debt is accessible, a critical equity funding shortfall constrains the sector’s growth. Recent government initiatives, while promising, illuminate the gap between ambition and execution. The inaugural rounds of the Housing Australia Future Fund and National Housing Accord Facility attracted bids for over 50,000 dwellings, yet only 185 projects are progressing, with potential to deliver 13,700 social and affordable homes.
Institutional investors, particularly superannuation funds, represent an untapped wellspring for addressing this funding gap. However, securing their participation demands a robust project pipeline, predictable returns, and unwavering policy stability. Innovative financing mechanisms – from mezzanine debt structures to public-private partnerships – could bridge the divide between traditional funding sources and project needs. The pioneering partnership between Lighthouse Infrastructure and SGCH, a leading Tier One CHP, for essential worker housing in Western Sydney demonstrates the transformative potential of institutional capital.
The emergence of build-to-rent marks another significant pathway for expanding housing supply and enhancing rental affordability. This purpose-built rental model delivers multiple benefits: stable returns for investors, security for residents, and opportunities for mixed-income communities that foster social inclusion.
Moreover, BTR creates unique opportunities for collaboration between institutional investors and CHPs. While several states have introduced supportive reforms, industry leaders advocate for further policy changes to accelerate the sector’s growth and its contribution to affordable housing supply.
Policy consistency emerges as the cornerstone of long-term success. The sector’s history is marked by fragmentation and short-term thinking, undermining sustainable progress. Today’s landscape demands unwavering bipartisan support to create housing policies resilient to political shifts and capable of inspiring substantial investment.
The National Rental Affordability Scheme serves as a powerful cautionary tale – while initially successful in creating affordable rental stock, its 10-year sunset clause ultimately saw properties revert to market rates, effectively erasing hard-won affordable housing gains. This experience underscores the imperative for programs designed with permanent affordability mechanisms rather than temporary solutions that risk compounding the crisis.
Innovation’s reach extends far beyond financing, encompassing revolutionary approaches to construction, delivery, and sustainable design. Modern techniques such as modular housing, prefabrication, and mass timber construction promise faster delivery and enhanced quality through off-site manufacturing. Digital technologies – from building information modelling to automated project management systems – are revolutionising development processes. Meanwhile, innovative design approaches prioritising energy efficiency and adaptable living spaces are creating more sustainable, cost-effective housing solutions. Scaling these innovations, while developing robust supply chains and workforce capabilities, will prove crucial in meeting Australia’s ambitious housing targets.
The housing sector stands at a transformative moment. As federal funding initiatives gain momentum, state and local governments intensify their engagement, CHPs expand their capabilities, and institutional investors show mounting interest, the potential for meaningful change has never been greater. Success hinges on maintaining this momentum while tackling key challenges: streamlining approvals, developing shovel-ready projects, creating aligned investment structures, fostering greater collaboration, growing the BTR product and strengthening CHPs’ capacity to deliver and manage projects at scale.
Looking ahead, summit delegates share a measured optimism about the sector’s evolution into a robust, investment-grade asset class. The foundation for success rests on three pillars: fostering meaningful collaboration, replicating successful models, and maintaining steadfast policy consistency. While the housing crisis presents formidable challenges, it simultaneously offers an unprecedented opportunity to reshape Australia’s housing landscape through innovation and partnership.
The path forward demands unwavering commitment from all stakeholders. By orchestrating efforts across government, industry, and community sectors, Australia can transform its housing crisis into a catalyst for creating sustainable, affordable communities that benefit all citizens. The window for action stands open – the time to seize it is now.
Adrian Harrington is a non-executive director of the ACT Government’s Suburban Land Agency, NSW chair of Housing All Australians and a senior adviser to Lighthouse Infrastructure on Affordable Housing.
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