Funding the supply of housing stock to improve affordability for members who risk never being able to buy property is being weighed up by super funds such as Cbus.
The proposal has been prompted by state governments contacting super funds about their interest in investing in social housing.
David Atkin, chief executive of Cbus, said that the superannuation system had been founded on the concept of members coming into retirement debt free, but that this premise was not a reality for many and an increasingly difficult prospect for younger members.
“We think there is an obligation on the industry and us to find ways to provide affordable housing opportunities for the community,” he said. “If we can then we are protecting the system.”
He added that Cbus would take construction risk on such projects if it was “properly priced and provided the appropriate risk-adjusted return for the fund”. However, designing the right funding structure still remained a work in progress.
A Committee for Economic Development of Australia (CEDA) report entitled The Super Challenge of Retirement Income Policy has called for the retirement system to better recognise “the extent to which owner-occupied housing contributes to household wealth and retirement liveability”.
While the 11th Annual Demographia International Housing Affordability Survey: 2015 has highlighted Sydney as the third least affordable city in the world for first time buyers of property (after Hong Kong and Vancouver) and Melbourne as the ninth least affordable.
The Cbus proposal is being matched by separate efforts by social impact fund designer Grace Mutual to cut a deal with the Commonwealth Government to build affordable housing, partly funded by superannuation money.
Andrew Tyndale, director of Grace Mutual, said such investments made sense for super funds such as Cbus with large numbers of low to middle income members.
“If they can put their hand on their heart as a trustee to say I am maximising revenue for a reasonable risk and also generate a return for the members, they should be going for it with their ears pinned back.”
Tyndale said that while he had interest in his affordable housing investment proposal, he was loathe to discuss it in any detail, as the go-ahead for such projects was often based around highly political decisions.