A new report by Chris Leptos, who led an independent review into the government’s National Housing Finance and Investment Corporation (NHFIC) Act, has found that commonwealth housing policy has been able to ‘directly influence the provision of housing to the benefit of Australians’, but also warns that another $290 billion over the next 20 years is needed to meet demand for affordable accommodation.
“Meeting this shortfall will require active private sector participation and high levels of collaboration across all levels of government. Despite its considerable early success, NHFIC is just one part of the overall solution,” Leptos said in the report.
Leptos was appointed by the government to undertake a review of the Act which administers the first home loan deposit scheme, an affordable housing bond aggregator, and the national housing infrastructure facility last year. A report of his review was tabled in parliament on Thursday.
A key recommendation in the review underscored the role of the private sector in delivering the housing needs of the future, with Leptos saying the sector must ‘crowd in’ and be catalysed using NHFIC’s unique convening authority. Research undertaken by the facility had contributed positively to the understanding of national housing supply and demand dynamics, he said but its research function was too broad and should focus on how the agency could support efforts to catalyse private sector investment.
“Meeting [the future housing] shortfall will require active participation by the private sector and high levels of collaboration across all levels of government,” Leptos said.
Federal minister for housing Michael Sukkar welcomed the findings of the report, issuing a statement that acknowledged the policy was only one part of the puzzle in achieving an overall solution to Australia’s housing crisis.
“The comprehensive review identified the scale of the affordable housing challenge will require active private sector participation,” Sukkar said.
The minister added that the report showed the government’s plan to improve national housing outcomes had been successful. Within three years the impact of the NHRC had helped more than 56,000 Australians start their home-ownership journey through the Home Guarantee Schemes, he said.
“[The policy also] supported 13,000 homes through the provision of $2.5 billion in low-cost loans to community housing providers (CHPs); and unlocked over 6,600 new social, affordable and market dwellings by financing enabling infrastructure,” Sukkar said.
“This is in addition to the expected $9 billion to be provided in 2021/22 on housing and homelessness across the country, including around $1.6 billion provided to the states to meet their primary responsibility for housing and homelessness.”
Sukkar also noted that the NHFIC had created one of the largest issuers of social bonds in the Australian domestic market, with each bond issuance up to 3 times oversubscribed.
In an area where states and territories have traditionally shouldered the primary responsibility and where responsibilities between levels of government have not been ‘neatly aligned’, Leptos said that federal agency directly impacted outcomes across the housing continuum.
Despite the NHFIC’s early success, which Leptos credited to the governance requirements of the Act, the appointment of a government observer to the board should revert back to a ‘standard governance model’ at the earliest possible opportunity.
Leptos also said there was room for more improvement to the facility, explaining that there was a general uncertainty about who could access it and what types of projects it could support. The size of government grants for its capacity building program for CHPs had the right intentions, he said, but were ‘too small to make a difference’.
In the case of beneficiaries of the first home loan deposit scheme (FHLDS), the report found that the program only allowed people into the market sooner rather than supported those who would have otherwise struggled to enter the market.
“Evidence presented to the review indicates that the FHLDS appears to be achieving this objective (earlier access to the housing market) for the cohort of first home buyers who are able to secure a FHLDS guarantee,” Leptos said.
“The limited evidence available indicates that the FHLDS has mostly brought forward buyers who would have entered the property market relatively soon, rather than buyers who would have otherwise struggled to enter the market.”
The review also recommended that the government expand the NHFIC’s mandate, giving it the explicit job to ‘crowd in’ other financiers to support the delivery of social and affordable housing at a larger scale. An important component of the recommendation was the agency be allowed to lend beyond the CHP sector to other NFP providers of social and affordable housing.
“The government will now consider the review’s recommendations,” Sukkar said.