And soon coming out our way..
And maybe sooner than we think.
From today's SMH
Super funds stump up to get more people into homes
Josh Gordon
HOUSING AFFORDABILITY
Hundreds of millions of dollars of retirement savings will be thrown at the housing affordability crisis under a deal struck between industry superannuation funds to boost the supply of low-cost homes.
In a landmark agreement, four of the nation’s biggest industry super funds, along with industry super fund-owned IFM Investors, have agreed to lend their members’ money to community housing providers wanting to build social and affordable housing using the federal government’s Housing Australia Future Fund.
The five entities – Cbus Super, CareSuper, Hostplus, Rest and IFM – have announced plans to provide long-term debt to pay for low-cost housing ‘‘at scale’’, after concluding they will now be able to generate a strong enough rate of return for their members.
It remains unclear how much the five entities, which collectively manage about $505 billion, are planning to lend or the rate of return they are expecting.
Rest chief investment officer Andrew Lill said housing affordability represented a huge challenge, but tackling it could significantly improve the financial security of members from the retail sector.
‘‘We represent around 1.25 million members aged under 35, and we know housing affordability is a driver of financial stress for many of them,’’ Lill said. ‘‘We’re excited about the potential of this partnership and the impact it could have on our members’ lives.’’
The idea of retirement savings being used for subsidised housing has been talked about for decades but has failed to gain much traction, partly because superannuation funds face strict financial obligations to provide commercial returns for their members.
Although superannuation funds have typically been prepared to invest in public infrastructure such as road, rail and port projects, until now there has been little direct investment in social housing or even lower-cost rental housing.
Under the fund announced last year, the federal government will initially borrow $10 billion to invest, generating an estimated annual return of $500 million, which
will in turn be used to subsidise housing development.
As part of the superannuation funds’ plan, community housing organisations will borrow from them and other institutional investors as part of a push to build 40,000 units over five years, backed by federal subsidies providing annual subsidies for 25 years from the fund.
Professor Hal Pawson, associate director at UNSW’s City Futures Research Centre, has estimated a rough government subsidy of $417,000 per dwelling.
The existence of the subsidy appears to be enough to give the superannuation industry confidence that it can generate strong enough returns to meet strict financial obligations to their members.
The annual subsidy payments, along with rental income from tenants, will let housing providers meet financial payments to the big funds, as well as ongoing costs such as maintenance.
The move follows decades of neglect for social and affordable housing, particularly in Victoria.
Last year, former Commonwealth Bank chief executive and Future Fund board of guardians chairman David Murray told The Australian Financial Review that retirement savings should not be used for affordable housing.
‘‘Appropriating superannuation fund members’ money to that purpose is not the solution,’’ he said.