The Turnbull Government has released a Consultation Paper to address Australia’s housing affordability woes.
Australian house prices have surged more than 140 per cent in little more than a decade — propelled by low interest rates, a lack of supply and a tax system that favours property investors, Sydney is now the second-most expensive housing market in the world.
In the 2017-18 budget, the government announced a comprehensive housing affordability plan to improve outcomes across the housing continuum. The government’s plan included the formation of the National Housing Finance and Investment Corporation (NHFIC), the National Housing Infrastructure Facility (NHIF) and an affordable housing bond aggregator.
The federal government seeks feedback on the potential structure and governance of the NHFIC, the operation of NHIF and the affordable housing bond aggregator.
The NHFIC is set to be established by 1 July 2018.
The NHIF seeks to provide $1 billion over five years to support local governments in financing critical infrastructure to reduce bottlenecks that impede development and build the infrastructure needed to speed up the supply of new housing.
It is expected that the NHIF will consider “greenfield” and “urban infill” infrastructure projects that can demonstrate an increase in supply and target those areas that are experiencing affordability pressures.
According to Assistant Minister to the Treasurer Michael Sukkar, the affordable housing bond aggregator aims to provide cheaper and longer term finance for community housing providers. It will do this by aggregating their borrowing requirements and issuing bonds into the wholesale market at a lower cost and for a longer-term than traditional bank finance.
These bonds would be passed through the bond aggregator to eligible community housing providers at similar interest rates and tenors.
The Affordable Housing Working Group published a report called Supporting the implementation of an affordable housing bond aggregator that made the following recommendations:
- The Commonwealth and State and Territory governments progress initiatives aimed at closing the funding gap, including through examining the levels of direct subsidy needed for affordable low-income rental housing, along with the use of affordable housing targets, planning mechanisms, tax settings, value-adding contributions from affordable housing providers and innovative developments to create and retain stock.
- The Commonwealth and State and Territory governments and the community housing sector work together to develop and implement a uniform and nationally applied regulatory framework that supports the implementation of a bond aggregator as well as the growth of the sector nationally.
- The National Industry Development Framework for Community Housing be revised and updated to reflect findings and recommendations from the Review of the National Regulatory System for Community Housing.
Interested parties are invited to lodge written submissions by Friday 20 October 2017.