Australian Economy

[+] Solving Housing Crisis ‘Good for Business’

Chronic under-investment has created an affordable housing shortfall that has become an “economic time bomb” costing Australian taxpayers $25 billion each year by 2051. 

Housing All Australians founder Rob Pradolin commissioned the Give Me Shelter report to demonstrate the economic imperative for investing in affordable housing. And with an extensive career in property, he is calling on the sector to lead the way.

The report provides some hard truths around the social and economic costs of Australia’s overburdened housing sector, and a business case that proposes a $55-billion investment would deliver a 2:1 cost benefit ratio. 

Pradolin says if we do nothing now, the problem will snowball into a $110-billion basketcase. 

“We need to do something, the time for action is now … this is an economic time bomb,” Pradolin says.

“It’s going to cost us $110 billion if we do nothing. Or we can invest $55 billion. It’s a no-brainer business decision.”

But the problem is there is no political will to pay from the public purse, which is why, Pradolin says, industry must lead the way. The $55 billion will “top up” the economic feasibility for industry leaders to tackle the problem at the coal face. 

“The majority of developers actually care about where this country is going in terms of affordability and homelessness,” he says.

“We see affordable housing as economic infrastructure for a thriving and prosperous community. But it’s becoming a generational problem.

Comparative cost-benefit ratio

▲ Source: Give Me Shelter report

“Our long term goal is to have a national discussion with businesses. The problem is so big that governments won’t solve it by themselves. Economists agree we have a huge problem, we need a 30 to 40 year strategic plan and we need to figure out how to fund it. 

“We have to increase supply, but it takes five years to do that. This is not a turn on the tap and it will come, this is a five-year gestation period.

In June 2021 there were 790,000 people living in 440,000 social housing properties. More than two-thirds of these were publicly owned. Commonwealth Rent Assistance was provided to almost 1.5 million people. 

According to the Rental Affordability Index, the number of households renting is on the rise and the cost of renting has escalated as a proportion of income. AHURI estimates that about 1.3 million Australian households need additional housing assistance. 

There is less social and affordable housing stock available than there was a decade ago. 

▲ The ongoing housing affordability crisis and homelessness of vulnerable people is being normalised, according to Housing All Australians founder Rob Pradolin.

More low-income Australians are pushed into the private rental market and forced to pay unaffordable rents. About 43 per cent of all low-income households are in housing stress, compared to 35 per cent in 2008. 

If nothing changes, more than 2 million Australian households on low incomes in private rentals will be in housing stress by 2051. They will be paying rents in excess of the international benchmark of 30 per cent of income.

Former ACCC chairman Graeme Samuel says the business sector has a long history of driving policy change.

“The lack of affordable housing is an issue to the business sector given this is a problem that is only going to get worse without a nationally co-ordinated response at the highest levels of government and industry,” he says.

“Advocacy for change can’t just be left to housing charities. Staff are a business’s most valuable asset, so it is incumbent upon the business community to communicate to governments the need for better housing outcomes to secure workforces and lift productivity.” 

▲ Assemble is developing social and affordable housing across Melbourne with a unique build-to-rent-to-buy model tackling housing affordability.

Affordable housing developer Assemble is one private property player taking the bull by the horns in a very unique way. 

The privately-funded developer has a $3.5-billion affordable and social housing portfolio of more than 5000 dwellings, with a mix of build-to-rent-to-own, key worker, and build-to-rent models. 

Superannuation fund, Australian Super, acquired a 25 per cent stake in Assemble in 2020.

Assemble managing director Kris Daff told The Urban Developer the superannuation funds supporting affordable housing showed thought leadership and would boost the burgeoning asset class. 

“When you’re in build-to-rent running at a 4 per cent yield compared to office running at 4.5 to 5 per cent it’s hard to be the first movers,” Daff said. 

“But Australian superannuation funds looking for long-term, very stable returns will be a shot in the arm [for the sector].”

You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals.
Click here to learn more.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.