City Futures Research Centre UNSW Built Environment

Filling the Gap: Costing a National Affordable Housing Program

The project was commissioned by Community Housing Industry Association NSW (CHIA NSW) and Homelessness NSW, and aimed to estimate the costs of delivering new supply of social and affordable housing based on needs estimates developed in AHURI research for social housing, and extended in this project to estimate needs for affordable housing. This research focused on an assessment of housing needs, rather than who strictly qualifies for housing assistance or is on a formal wait list for social housing.

The analysis centres on two cohorts. The first are households deemed to be in need of ‘social housing’ (implying higher levels of housing subsidy) and includes only households in the bottom income quintile (Q1) for Australia and who are in private rental stress, combined with homelessness figures. The second category relates to households in need of ‘affordable housing’ (implying lower levels of housing subsidy) which includes households who were assessed as being in housing stress who are in the second income quintile (Q2) for Australia.

Using needs assessments, the research estimates the cost to government in delivering those needs over the next 20 years. Cost to government has been modeled according to a number of different funding scenarios outlined below:

Two models of Social Housing Provision
  1. Operating Subsidy model (Annual operating payment over a period ten years)
  2. Capital Grant model (Development costs met by upfront payment - cash and/or land)

Four models for affordable housing provision
  1. Operating Subsidy model (Annual operating payment over a period ten years)
  2. Capital Grant model (Development costs met by upfront payment - cash and/or land)
  3. Mixed Tenure Market Sale Capital Grant model (Market cross subsidy assumed from a 50:50 market sale/affordable rental development. That is, for every affordable dwelling built, an additional market dwelling is built and sold)
  4. Private Equity Finance Operating Subsidy model (50% equity with gross rate of return of 5%)

Final Report