Housing Supply Bonds: a suitable instrument to channel investment towards affordable housing in Australia?

Summary

This research project draws on international evidence, experts and financial modeling to explore the possibilities of utilising bond finance as a means of expanding affordable housing in Australia. In particular, it adapts the Austrian model of Housing Construction Convertible Bonds to the Australian context.

Project Number: 30652
Research Theme(s): Housing affordability
Project Leader: Lawson, Julie
Funding Year: 2011
Research Centre: RMIT

Description

While international efforts in the field of private finance for affordable housing accelerated in the 1990s, Australian policy has continued to rely heavily on government funding and sporadic innovative programs. This project investigates the potential to adapt the Austrian Housing Construction Convertible Bonds scheme to Australia. The Austrian scheme has been found to be popular among risk averse investors, an efficient scheme for capturing long-term savings, and given the modest tax incentive, very cost effective.

The project presents a well-grounded concept for an Australian Housing Supply Bond that would be issued by a specialised financial intermediary, and regulatory measures that are designed to ensure that the funds raised through bond issues are channeled towards affordable rental housing and meet outcomes required by governments. The report also offers a practical strategy to move from concept to implementation, by drawing further on industry expertise and harnessing and developing capacity within the public sector.

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