Housing Matters Report 2024: Unlocking the supply of social and affordable housing at scale

In 2024, Right Lane Consulting produced our first Report into the forces at work in the Australian Housing sector, Housing Matters: Unlocking the supply of social and affordable housing at scale.

Summary

Australia faces a significant housing crisis driven by rising demand and chronic undersupply. While government funding and policy reforms are spurring activity, new partnerships, institutional investment, and innovative models like build-to-rent are essential to address the scale of the challenge. The report calls for coordinated government action, industry collaboration, and regulatory reform to unlock the supply of social and affordable housing at scale.

Purpose and Scope

• The report investigates trends impacting Australia’s housing industry, focusing on unlocking the supply of social and affordable housing at scale.
• It draws on research and insights from institutional investors, Community Housing Providers (CHPs), government, and developers.
• The main audience is government, CHPs, and institutional investors, but the report is publicly available to inform broader stakeholders.

Key Findings

1. Australia’s Housing Crisis

• Demand for housing is rising due to population growth, migration, and longer life expectancy.
• There is a chronic undersupply of appropriate housing, especially for low- and moderate-income earners.
• Housing insecurity is increasing, with an estimated 641,000 Australians currently homeless or living in unaffordable housing.
• Social housing stock has remained static for a decade, now representing only 4% of total housing—well below the OECD average.
• The private rental market is increasingly unable to provide affordable housing for lower-income Australians.
• Home ownership rates have declined, especially among people under 35.
• Housing costs are outpacing incomes, pushing more households into housing stress.
• Homelessness is disproportionately experienced by women and Aboriginal and Torres Strait Islander Australians.
• CHIA estimates 942,000 social and affordable homes need to be built over the next 20 years to meet demand.

2. A New Approach to Housing

• Recent government funding commitments (e.g., Housing Australia Future Fund—HAFF) will boost supply but are insufficient to fully meet needs.
• Collaborative approaches and new partnerships are required to fill the gap.
• Government alone cannot solve the crisis; industry stakeholders must also play their part.
• The HAFF and other commitments will meet less than half the demand for social and affordable housing over the next five years.
• New affordable housing models (e.g., build-to-rent, ground lease, shared equity) are emerging, involving both not-for-profit and for-profit stakeholders.

3. Institutional Investment

• Large institutional investors (especially superannuation funds) are driving increased investment in social and affordable housing in the UK and US.
• Australia’s superannuation system holds nearly $4 trillion in assets, a significant source of domestic private capital.
• The track record of super funds investing in social and affordable housing in Australia has been limited and sporadic.
• Recent policy reforms and partnerships have addressed some barriers, with super fund commitments now exceeding $200 million.
• Investing in social and affordable housing must provide satisfactory long-term, risk-adjusted returns for investors.
• New partnership models are emerging, such as AustralianSuper’s stake in Assemble and HESTA’s commitment to Super Housing Partnerships.
• Streamlining planning, improving land access, and enabling satisfactory returns would create a more conducive environment for institutional investment.
• ESG (Environmental, Social, Governance) reporting standards are being developed to measure impact and attract investment.

4. Build-to-Rent (BTR)

• BTR is an established asset class internationally, providing benefits to tenants (secure, flexible housing) and investors (stable long-term returns).
• The UK’s BTR sector grew rapidly and offers lessons for Australia.
• In Australia, BTR is emerging but faces regulatory, financial, and cultural barriers.
• CHPs are well-placed to play a pivotal role in developing both affordable and market BTR.
• BTR development is hindered by fragmented regulation, lack of a defined asset class, unfavourable tax settings, planning requirements, and cultural perceptions.
• Opportunities to de-risk and enable investment in BTR include establishing a national housing framework, defining a new BTR asset class, increasing government support, and expediting planning.

Recommendations

Right Lane Consulting recommends six actions for government to unlock the supply of social and affordable housing at scale:

1. Double Commonwealth funding and extend HAFF capacity for new development commitments.
2. Provide funding certainty for social and affordable housing development.
3. Encourage scale by aggregating projects and supporting partnerships between CHPs and institutional investors.
4. Establish a national housing framework with consistent regulation and policy.
5. Support capacity and capability building in the CHP sector.
6. Expedite planning and unlock access to land for development.

Glossary and Data

• The report provides definitions for key terms (e.g., affordable housing, social housing, BTR, CHP, housing stress) and lists relevant abbreviations.
• Data is drawn from recent government and industry sources, with every attempt made to use the most up-to-date information.

If you would like to know more about our work in the housing and homelessness sector, get in touch today.