Additional $2 billion Federal Budget financing lifeline for low cost housing outcomes

With housing affordability cost of living pressures shaping as the key election issue, PowerHousing Australia was pleased to see the Liability Cap which the National Housing Finance and Investment Corporation (NHFIC) has to lend to Community Housing Providers(CHPs) increased by $2b to $5.5b in tonight’s Federal Budget.

This additional low-cost finance, secured in a period where interest rates are set to rise, will save $350m to $400m in estimated interest costs for CHPs over the next decade. The increase to the liability cap of NHFIC’s Affordable Housing Bond Aggregator (AHBA) is expected to support 27,500 dwellings.

This liability cap increase will help maximize the sustainability and longevity of the community housing sector moving forward, assisting providers to plan ahead and will help create a pipeline of social and affordable housing options that not only meet current, but future projected demand.

We are pleased that the Federal Government has listened to PowerHousing Australia’s calls to increase the cap to tackle additional demand arising from massive price increases in rents, dwelling prices and flood related pressure on dwelling availability. But there is still so much more to do!!

What will be a pivotal election issue will be the sheer lack of affordable rentals and this is the key area of focus in the 2022 Federal Budget to assist this group of people today.

Our recent data (with CoreLogic) release shows that there were 65 electorates that saw rental rises of greater than 10% and 87 electorates with more than a 20% increase in median dwelling prices for 2021.

This lower interest rate and certainty beyond smaller refinancing has been a game changer that to date has seen over 23 of PowerHousing Australia’s 36 CHP Members being able to provide more housing for less cost and opened the door in institutional investment partnerships.

In the case of one PowerHousing Australia CHP member SGCH, is estimated to realise around $100m interest savings over the 10 year term of its current combined $475m NHFIC loan facility. There are additional savings also due to reduced refinancing costs every 4 to 7 years.

Whilst there is a need for the continual review and adjustment of the cap to meet needs as they change and to lock this in to create certainty, this announcement tonight is a significant boost.

We are far from out of the woods though and greater numbers of social and affordable homes are needed today more than ever and the concept of a capital aggregator and a national plan must be announced next to alleviate housing pressures from an incoming Federal Government.