Affordable housing touted as new asset class

Treasurer Scott Morrison is keen to encourage superannuation funds to invest in affordable housing as a “longer-term fixed interest” asset class.

Speaking at the Australian Housing and Urban Research Institute in Melbourne earlier this week, Treasurer Scott Morrison presented institutional investment in affordable housing as a potential remedy to high property prices.

The government has also been considering allowing first home buyers to access their super for a deposit – an idea that has been roundly rejected by the industry.

But in his speech Mr Morrison focused on the need for developers, governments and investors to work together to “de-risk investment in affordable housing”.

“As is already occurring overseas, the goal is for affordable housing to be conceived not so much as a real estate investment, but a longer term fixed interest investment that can comfortably sit within institutional investment portfolios,” Mr Morrison said.

“As with residential real estate, this will require the same prerequisites to establish a new institutional investment class.

“The other key requirement is the development of a mature housing mutuals sector that has the scale, expertise and balance sheet to partner with developers, governments at all levels and investors.”

Mr Morrison pointed out that there is clear appetite for this from pension funds, particularly in the US and Canada, and expressed his hope that a similar appetite could be cultivated among Australian super funds.

“In fact, our funds are already investing in similar products in the UK. What could be more in the interest of nurses, teachers or police pension fund members than investing in affordable housing for nurses, teachers and police officers?”

Industry Super Australia was quick to embrace the idea, with ISA director of public affairs Matt Linden labelling the idea a “step in the right direction”.

“Industry SuperFunds are willing investors in affordable housing where returns are viable and welcome suggestions of creating new opportunities for institutional investment,” he said.

[Related: Oversimplifying housing affordability ‘cynical and cruel’, says Treasurer]

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Francesca Krakue

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