Even in the context of a policy black hole, it is still possible to deliver affordable housing opportunities if you choose the right model and engage the right people. Drawing on our recent experience in this space, we’re sharing our insights for those looking to get some form of affordable housing project across the line, even in the absence of the ‘holy grail’ policy shift everyone waiting for. This is the first of a two-part blog series.
The release of the NSW State Budget has once again stirred significant discussion about the lack of meaningful government support for social and affordable housing. The scale of this wicked problem, the challenges associated with supply and a various solutions have been well documented (AHURI is the most comprehensive source on this) so there’s no need to outline it again here.
As specialists in enabling social transformation through co-designing innovative models and fostering cross-sector collaboration, the challenge of delivering financially viable social and affordable housing opportunities has inevitably come across our desk several times.
Over the past 18 months, we’ve worked with a range of organisations – from local governments, to developers, to not-for-profits and philanthropic organisations – who are seeking opportunities to maximise the positive social impact of their developments, programs and funds. At the same time, they need to win over investors, internal stakeholders and their community constituents. Through this process we’ve seen some affordable housing projects successfully implemented and others fail to make it past the first hurdle. Following from this, we’ve written this article for in-house project managers, financiers and advocates in both the public and private sectors who are working to deliver affordable housing solutions.
But before we move to our practical tips for success, let’s briefly discuss why this conversation is at a tipping point.
FROM INACTION TO ACTION, FROM SPECULATION TO ACTIVE INVESTIGATION
Almost all of the presentations and discussion at the Affordable Housing Conference held in Sydney in late June were focussed on the shape and form of policy intervention needed to address the social and affordable housing crisis. While there’s no doubt that meaningful government policy is required, over the last 12 months we’ve observed a noticeable shift in the conversation. Investors, developers and even local government are speaking of and pointing to opportunities for supply of additional stock prior to policy intervention. These conversations are characterised by a movement from inaction to action, from speculation to investigation, which are spurred by two key trends:
- Growing political momentum means policy shift is a matter of time. Earlier this year, the NSW Government formally adopted the 5-10% social and affordable housing target proposed by the Greater Sydney Commission, which follows similar actions in other states. While these targets remain mostly ‘toothless’ in relation to enforcement, it’s clear the wheels are in motion. There is no doubt this issue is now garnering mainstream voter support and given this, some sort of meaningful policy (be it through carrot or stick) is now only a matter of time. The market has noticed this and has started to take action.
- Growing influence of social impact investors. A report published by AHURI last year outlined the rapidly growing impact of social impact investors on social and affordable housing. Social impact investments, which fund solutions to complex social problems including housing and homelessness, were worth an estimated AU$2 billion in 2013 and could grow to as much as AU$32 billion in the 2020s. Through collaboration between service providers, investors and governments, social impact investments can tap new sources of capital and enhance the return on government investment. We’ve seen this growing momentum first hand, including by the Lord Mayors Charitable Foundation who have committed over $3 million to affordable housing solutions.
In response to these two movements, we’re seeing an increasing number of organisations in the private sector exploring ways they can ‘dip their toe’ in the affordable housing space, preparing themselves for the inventible market shift.
Keep an eye out for our second blog in this series, which will focus on practical tips for getting affordable housing projects over the line.