Investment Incentives ‘Key’ to Firing Up Affordable Housing

Investors and developers need to be incentivised on social and affordable housing, says a leading consultant in economics and planning.

“The rents that you get from leasing properties to low and moderate-income people will not provide you a return to warrant the commitment of capital,” says Marcus Spiller, who will give the opening address at The Urban Developer Affordable and Social Housing vSummit on Thursday, October 27.

“There is a level of return for providing social and affordable housing, but developers and investors need a top up payment.”

Spiller has worked as an academic, local government town planner, ministerial adviser and senior bureaucrat in both state and federal government agencies. He is an expert in regional economic development, housing policy, infrastructure funding and metropolitan governance. 

Most recently Spiller’s a founding partner at SGS— an urban and public policy consultancy—where earlier this year he authored Give Me Shelter, a cost benefit analysis which showed the long-term costs of failing to address the shortfall in public, social and affordable housing.

The report, commissioned by Housing All Australians, showed continuing to ignore social and affordable housing needs will be cost the Australia $25 billion per year by 2051.

The report said while Australia’s population grew by more than 25 per cent between the 2001 and 2016 census years, the stock of occupied social housing shrank by 2.5 per cent. Social housing now makes up less than 4 per cent of all dwellings compared with almost 6 per cent in 1996.

▲ Spiller says social and affordable housing can be a good investment once government plugs the gaps in return.

Housing All Australians—a coalition of mainly private businesses—aims to use the SGS research to prod the Albanese government into action and provide investors the incentives to which Spiller is referring.

“Once that gap is closed then there's no reason at all why you wouldn't have substantial amounts of institutional capital flowing into the area,” he said.

Spiller points to the Australian superannuation funds which prefer to invest in affordable housing assets in the US, rather than at home.

“Because in the US they have what's called a low-income tax credit scheme, which is in effect a return top up to investors. 

“They're more or less effectively government guaranteed, so you don't have to have the really top shelf returns in terms of risk-adjusted returns. And it's more than enough to mobilize capital.”

The Labor government came to power with a promise to set up a $10-billion Housing Australia Future Fund, with plans to build 30,000 social and affordable housing properties in its first five years.  It would also add 20,000 social housing properties—4000 of which will be allocated for women and children fleeing domestic and family violence—and 10,000 affordable homes for the frontline workers like police, nurses and cleaners.

“These are moderate income earners who might have a job in the hospitality industry or health care or something like that; usually essential workers, people you want to have close by,” Spiller said.

“And quite a lot of these people are also in serious housing stress in the private rental market.

“It's an interesting problem.  We pride ourselves as an egalitarian country that gives a fair go to all, but we dropped the ball on social and affordable housing investment back in the 1980s.”

Join us on Thursday, October 27 when Australia’s leading developers, investors, designers and advisors working within the sector present the different models for developing affordable housing at The Urban Developer Affordable and Social Housing vSummit.