Social housing as infrastructure: an investment pathway

Ensuring necessary and appropriate levels of social housing investment begins with a well-evidenced understanding of the scale, type and location of need and secondly, an accurate understanding of the cost of procuring appropriate dwellings in the right locations. The design of an investment pathway, and the use of public or
private equity and debt, also significantly influences the cost to government and the wider community.

Our research builds a customised method for establishing both current unmet need (the backlog) for social housing and future projected need, based on a proportionate share of expected future household growth. It also provides evidence for the diverse geography of land and construction costs based on industry and project  level data.

Five alternative pathways involving a range of debt, efficient financing and capital grant strategies have been modelled to assess their relative costs to government.

The research shows the ‘capital grant’ model, supplemented by efficient financing, provides the most cost effective pathway for Australia—in preference to the ‘no capital grant, commercial financing operating subsidy’ model.

Over the next 20 years, it has been estimated that 727,300 additional social dwellings will be required, with current price procurement costs varying from $146,000 to $614,000, depending on local land values, building types and construction costs in different regions. This report provides extensive data on needs and costs for 88 statistical areas (SA4 level).

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Source: AHURI