This study analysed recently completed affordable housing developments across Australia to ascertain how affordable housing project costs, revenues and subsidies interact. The research reveals the diverse funding arrangements adopted by providers, which have resulted in affordable housing project outcomes being driven by funding opportunities rather than by defined housing needs, and identified six key lessons about financing affordable housing.
In this study, six recently completed affordable housing developments across Australia are analysed to ascertain how affordable housing project costs, revenues and subsidies interact to produce affordable housing.
Using the project data, an interactive modelling tool is developed. The ‘Affordable Housing Assessment Tool’ (AHAT) is designed to calculate the impact of different cost and subsidy parameters on housing affordability for the various types of lower income households in need of affordable housing.
The research reveals the diverse and bespoke funding arrangements adopted by providers in the study. This has resulted in affordable housing project outcomes being driven by funding opportunities rather than by defined housing needs. The AHAT uses housing needs to refocus decision-making on what housing outcomes are required and on what subsidy levers can achieve those outcomes.
The tool produced by the research is user-oriented and has substantial input flexibility. It aims to assist:
- policy-makers needing to assess the efficacy of different subsidy arrangements for affordable housing
- affordable housing practitioners wanting to know the impacts of prospective affordable housing projects under given subsidy schemes and market conditions.
Six key lessons about financing affordable housing are drawn from the research.
1. Government facilitated access to land is central to generating development opportunities and a key means of improving long-term project viability.
2. Government equity investment offers considerable potential for delivering feasible projects and net benefit to government.
3. Reducing upfront debt loads and lowering finance costs are critical to long-term project viability.
4. Delivery across the housing needs continuum helps to meet overall social and tenure mix objectives as well as providing opportunities to improve project viability through cross subsidy.
5. Planning policies can deliver additional sources of cash or land, however, the financial benefit of planning bonuses is limited.
6. Increasing the scale of not-for-profit housing provision will offer financial benefits for the long-term delivery of affordable housing.