Opinion editorial written by Eliza Hughes, Haven Home Safe Strategic Advisor.
Australia is facing a growing issue of homelessness and housing crisis. This is becoming increasingly clear throughout the regions we operate, and the communities in which we all live, work and play. The development of a National Housing and Homelessness Plan is an opportunity for the government to focus on the entire housing system and address policy settings to change how we view housing in Australia, so we start to see housing as both a human right and essential infrastructure. Through collaboratively developing the Plan, we have the opportunity to understand and optimise the roles we each play in reducing the cost of delivering affordable housing solutions to unblock the housing continuum and address our socio-economic issue of homelessness.
Haven Home Safe homelessness organisation that specialises in housing solutions. We provide hope, care and help to prevent homelessness, end housing stress and sustain Victoria’s regional communities. To achieve sustainable outcomes requires a functioning continuum of housing options from crisis accommodation, through transitional housing to affordable rental and into home ownership.
Market, mid-market and sub-market housing
Housing markets are complex, with multidimensional impacts from a range of direct and indirect policy settings. It is clear that housing in Australia is becoming increasingly unaffordable, risking significant negative social and economic consequences. Home ownership is the ultimate aspiration and outcome for many households, and policies that support home ownership have value.
However, a precursor to owning a home is usually renting a property which is affordable. With the growing disparity between housing demand and housing supply, there is an increasing proportion of society who are facing greater barriers to home ownership.
Further, there will always be a portion of society for whom home ownership will never be in reach, and a smaller portion for whom a safety net must be provided. Therefore, whichever dynamic is faced within the housing market, ensuring an adequate supply of housing within the lower to middle spectrum of the housing continuum is essential for a well-functioning and equitable society.
The growing problem of homelessness and housing crisis is predominantly caused by blockages and bottlenecks within the sub-market options of the housing continuum, exacerbated by the lack of options of exiting into the mid-market, and the outdated arbitrary approach of current support funding models. To address the issue, we need to increase access to safe, secure, sustainable and affordable fit for purpose homes for people on the lower end of the income spectrum, as well as support the emergence of a strong housing mid-market. Combine this with effective supports, in a system which is predicated on outcomes-based funding with flexibility to respond to the needs of people, will optimise outcomes for people, communities and society at large.
As we develop the Plan, now is the time for the Federal Government to recognise and act on its market-making and system-stewardship role. With systemic and decision action they could stimulate an investible market within the mid-market which would have a positive flow-on effect across the entire continuum.
Addressing the homelessness and housing crisis
Haven Home Safe has formed an ecosystem of partnerships to address the homelessness and housing crisis through effective solutions which:
- strengthen prevention and early intervention measures;
- focus on people and connection to community;
- increase housing supply; and
- apply Housing First as the fundamental principle.
These areas of focus are supported by the recently released final report of the Inquiry into Homelessness in Victoria which made a range of findings and recommendations to address the bottlenecks within the homelessness and housing system. We see value in this approach being applied at the national level. A change in policy focus within three systemic areas was proposed, as shown in the diagram below:
Prevention and early intervention are the first steps in reducing the number of people becoming homeless.
However, once a person becomes homeless, access to crisis and emergency housing is a critical next step. Yet in the areas we operate, there is a shortage of crisis and emergency housing, and what options are there are becomingly increasingly difficult to access. Increasing provision of crisis and emergency housing is the first section of the continuum to be unblocked.
Moving through to transitional housing is the next step in the continuum to focus on increasing access. Within these sub-market tenure types, Government must play the lead role. There is market failure here, and we cannot rely on the market to solve the issue. We must move away from neo-liberal assumptions and re-establish appropriate levels of government investment to deliver the necessary baseline of sub-market housing. From there, we should collectively focus on systemic solutions to provide longer-term, safe, secure, sustainable and affordable housing solutions.
To address the affordable housing challenge, clear insights are provided by the much-lauded McKinsey Global Institute,which suggests the following key levers to systemically deliver affordable housing outcomes:
Solutions in partnership
By applying the range of cost-reduction levers and combining these with the right policy settings, certainty of regulatory settings and a portfolio approach to funding, this will support the growing interest from private capital partners to invest in social and affordable housing. These mid-market housing solutions can complement, rather than compete with or challenge the viability of the private market, whilst unblocking the housing continuum and helping to resolve the homelessness and housing crisis.
Clear Roles and Integrated Capital
At each step along the housing continuum the risks and returns for investment – and the need for government subsidies, tax exemption or other incentives, change. Lessons can be learned from the United States, where they understand the flow of money. They understand who plays what role in the integrated capital stack – the role of traditional debt providers in a highly regulated market, the role of pension funds, the role of the philanthropic market, the role of mezzanine debt providers, the role of the community development financial intermediary market and then the role of the actual asset manager or asset owner.
They have different tenures, different risk profiles, different rewards and different liquidity event triggers. But it’s underwritten by long-term support at either, in our terms, local, state or the federal government level. To reduce the subsidy and lower the funding required from government, community housing organisations like Haven Home Safe can bring together a range of contributions, attract private investment and capability, and package these with our own capability and resources to deliver effective and efficient social and affordable housing solutions.
To optimise housing supply within the sub- and mid-market, HHS would like to see the Government take a portfolio funding approach to foster sector growth and expand housing supply through its funding allocation, planning and approvals mechanisms. The current method of project-by-project funding forces community housing organisations to take heightened risk positions in the market, being subject to competitive constraints which often results in sub-optimal property plays given private market dynamics.
Working in true partnership and allocating a steady stream of portfolio funding would facilitate a pipeline of social and affordable housing supply as community housing organisations would have the ability to leverage the capital stack referenced above. This would deliver even greater efficiencies and value for money outcomes that are more people-centred, community-driven, with housing distributed through communities in which demand presents the greatest.
Social value of social and affordable housing
We recognise much of the above rationale presents the predominant viewpoint which is a purely economic and financial rationale seen through a narrow lens.
To unblock the housing continuum in the sub-market, we must be able to stimulate investment through appreciating the social value of the provision of safe, secure, affordable housing. Haven Home Safe has conducted an extensive review of reputable, evidence based national and international research, which demonstrates profound impact across three broad domains:
- wellbeing effect for people;
- cost-efficiencies for Government; and
- productivity benefits and socio-economic boost for community.
Effectively recognising and valuing these social outcomes and the wider impact of successfully housing people would be a welcome addition to the procurement strategy of partners within the social housing system. Rather than focusing solely on financial value for money, which has the tendency to drive sub-optimal housing provision, consideration of the social value of housing which has people at its centre has the capability of driving more sustainable growth.
Within the United Kingdom, the system there with the Social Value Act, the Green Book and PPN 06/20 could be well worth considering for its applicability in Australia as we develop the National Homelessness and Housing Plan.
Returning to the economic viewpoint, creating an investible asset class including social housing as essential infrastructure has been called out as a priority by Infrastructure Australia and Infrastructure Victoria within their most recent Infrastructure Plans and Strategies. This plays a critical role in the mid-market making role that Government has an opportunity to play.
Ultimately, our nation’s housing challenge is one that we all must come together to solve. It will take individuals and communities to show support for more social and affordable housing developments being built in their neighbourhoods. It will take collaboration between all levels of government, community housing organisations, developers, financiers, private investors and business.
Only together can we create a country where homelessness and housing affordability stress doesn’t become a defining characteristic of our nation. By taking a systemic approach to unblocking the entire housing continuum we can return to a functioning housing system which will go a long way to resolving the structural causes of homelessness.