The report,commissioned by lobby group Industry Super Australia,was released ahead of the federal government’s first meeting of financial leaders to discuss its housing accord,which allocates $350 million to deliver 10,000 extra affordable homes by mid-2029,with states and territories contributing funding or in-kind support for 10,000 more.
The federal government has said it will offer incentives to funds to invest in social and affordable housing by covering the gap between market and subsidised rents through availability payments,which is expected to be discussed on Friday.
The super industry broadly welcomed the accord,but funds areexpected to be cautious given laws require that members’ financial interests come first in investment decisions. Super funds have historically shied away from residential housing due to its high risk and low returns.
The report by Frontier Advisors released on Tuesday said that while there had been examples of super funds investing in affordable housing,they represented a small fraction of total available funds available for investment. It found about $41 billion would be invested in unlisted property over the next 10 years by APRA-regulated super funds,of which $35 billion would come from industry funds.
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But issues around scale,planning and development risk have impeded super fund investment in affordable and social housing.
“We just need a pathway for long-term investments,” said one of the report authors,Manish Rastogi. “And that can be achieved by government schemes and subsidies,whether they be rental,capital or subsidised land,and that will allow institutional investors to invest over the long term and earn a respectable return. And that’s the minimum they’re going to seek for providing private capital.