Government Would Save $1.6 Billion by Boosting Social Housing Construction to Post-war Levels, Says Report

Australia needs a tenfold increase in social housing construction to combat a shortfall of almost half a million properties left by 25 years of inadequate investment, a new report warns.

New research from The Australian Housing and Urban Research Institute (AHURI) estimates Australia will need 727,300 additional social housing properties by 2036 to ensure adequate housing for low-income earners.

AHURI has called on the government to fund this expansion itself, rather than turning to private investors as it has increasingly done in recent years.

With an existing shortfall of 433,000 social housing units nationally, AHURI researchers say 36,000 new social housing properties will need to be built each year  for the next two decades to meet future need.

Report co-author Dr Laurence Troy said that recently this figure had been closer to 3,000.

Forty years ago, he said, Australian governments invested to produce up to 14,000 new social housing units a year, but construction rates were now minimal.

“We estimate that [an] output of about 15,000 is needed just to stop the existing shortfall from getting even bigger,” Troy said.

“A renewed social housing program should boost output to a level similar to that seen in the early post-war period when state governments were building about one in seven new homes in Australia.”

It’s time to deliver new #socialhousing at ten times the current rate. And upfront funding by government not private partnerships is the cheapest way! #EverybodysHome @juliemlawson @AHURI_Research @NationalShelter @_EverybodysHome https://t.co/1aDzlepDWb via @ConversationEDU

— Kate Colvin (@ColvinKate) November 14, 2018

The report said Australia had been plagued by 25 years of inadequate investment in social housing, and needed a more sustainable pathway to effectively grow housing stock, without relying on private financing.

According to AHURI modelling, direct public investment and more efficient financing through the National Housing Finance Investment Corporation (NHFIC) is the best way to deliver social housing in Australia.

The lead author, associate professor Julie Lawson, said this minimised financing costs and reduced the need for ongoing operating subsidies.

“Direct public investment cost less in both the medium and long term,” Lawson said.

She added this would also build the value of government or non-government provider assets, allowing NHFIC finance to be invested into social and affordable housing for years to come.  

AHURI’s approach would cost the government $1.6 billion less in the first year compared to subsidising a commercially financed program, the report said. This represents a 24 per cent saving to the public purse.

The social sector has broadly welcomed the report and backed AHURI’s recommendations.

Everybody’s Home campaign spokesperson Kate Colvin said the social housing shortage was pushing homelessness to crisis levels, with 1.4 million Australians living in chronic housing stress.

Now we knew how much social housing was needed, she said, the next step was a national strategy for achieving it.

“We need to assist those struggling to find a home they can afford to rent as well, and like any other infrastructure that has been neglected for decades, it will take significant investment and commitment from all levels of government and all sides of politics to make it happen,” Colvin said.

National Shelter executive officer Adrian Pisarski said AHURI researchers had echoed housing advocates’ call for governments to publically invest in social housing.

“The research identifies the current shortfall and also projects what’s needed to meet population growth and shows how slack our government at state and Commonwealth level have been in allowing social housing to drop to such drastic levels,” Pisarski said.