Social housing as infrastructure and the role of mission driven financing

Abstract

Australia, like many other housing systems in Western Europe and the US, increasingly relies on private financing arrangements for social housing. It is spending more than ever before on demand side assistance, yet both the production of dedicated social housing and housing affordability are declining. From the perspective of needs-based social infrastructure, this paper presents the outcomes of research into the development of a more productive investment pathway. Multi-criteria evaluation and financial modelling compares and assesses the cost to government of five investment scenarios involving a range of debt, efficient financing and capital investment strategies. This research finds that, while current governments tend to favour private financing and facility lease arrangements, paying down private financing during operations is the least cost effective means for governments to subsidise social housing. Capital grant funding and land valuation policies are more cost effective in the medium and long term but require more active government involvement in needs based planning, strategic investment and regulation.