Adrian Harrington speaking at the Property Council’s The Future of Residential Conference
With the country suffering a housing supply shortage, particularly in affordable dwellings, the Chair of the National Housing Finance and Investment Corporation (NHFIC), Adrian Harrington, has told a Property Council forum the status quo is unsustainable.
Currently, the social housing waitlist sits at over 175,000 households with the current shortfall of social housing quickly approaching 433,000 dwellings at a time when Harrington said the country is going through an “affordability and housing crisis”.
“When you go to barbecues everyone used to talk about housing prices,” Harrington, who is also Charter Hall’s Head of Wholesale Investor Relations and Fund Raising, said.
“I’m at the age now where we’ve got kids that have left home and at the barbecues I go to it’s all about how our kids can afford to buy houses, particularly in Sydney and Melbourne.
“We all have to work together whether it be the federal government, the state governments, local councils, the institutional community and the community housing providers (CHP), because we have to deal with those very large numbers of dwellings needed for social and affordable housing over the next few years.”
This is the backdrop to the review of the National Housing and Homelessness Agreement between the Commonwealth and state and territory governments underway by the Productivity Commission.
The report has been handed to the federal government and while the at the time of writing the report has not been publicly released, it will likely inform many parts of the Albanese government’s objectives in this space.
The government came into power earlier this year with a promise to create a $10 billion Housing Australia Future Fund to build 30,000 new social and affordable housing in its first five years.
Each year investment returns from the Housing Australia Future Fund will be transferred to NHFIC to pay for social and affordable housing projects.
Harrington said the fund is an exciting initiative and noted that money from the fund will be put aside to repair old social housing.
“That’s something that’s forgotten about,” he said, “it’s not just about new supply. There’s just a lot of the social housing stock that’s been transferred to community housing providers that is really old, it’s tired, and with energy costs going up there’s a lot of those places that are just really poorly energy efficient.
“There’s a massive backlog, particularly in New South Wales, of the maintenance programs for the social housing, so that’s going to be a bit of a game changer for the community housing sector.”
Since its creation as a Commonwealth entity in 2018, NHFIC has approved $3 billion in long-term loans to 36 CHPs, supporting over 16,000 new and existing homes and saving these CHPs an estimated $550 million in interest and fees as well as other indirect costs associated with refinancing.
It has issued over $2.2 billion in bonds, 6 bond issuances with tenors up to 15 years and issued the first sustainability bond and floating rate note, in line with international ESG agenda.
They have also helped over 63,000 Australians purchase or build a home by administering the Government’s Home Guarantee Scheme.
At the recent Jobs and Skills Summit, the Albanese government announced it was widening the remit of the National Housing Infrastructure Facility (NHIF), making up to $575 million available to invest in social and affordable housing.
NHIF is administered by NHFIC and is a $1 billion facility originally created for eligible infrastructure projects that would unlock new housing, but a low take up meant after four years, only around $424 million in funding was approved.
The low take-up of the facility was “disappointing,” according to Harrington, but NHFIC will now use the funds that were not spent on infrastructure to assist CHPs.
“A yield subsidy effectively is going to now be funded into the community housing sector and to make more projects viable, which I think is a good use of that money,” he said.
Another declaration from the Jobs Summit was the government’s desire to get super funds active in the social and affordable housing market.
Many super and institutional funds in Europe and North America, according to Harrington, are looking at social and affordable housing as part of their ESG measures, a trend that is catching on in Australia.
“It was very interesting to see the Prime Minister and the Treasurer after the jobs summit come out and say that they want to see the super funds investing in this market,” he said.
“Having these super funds and global institutions invest in the sector is quite exciting.”