With the weakest home-building pipeline Australia has seen in over a decade, there is a growing push for the federal government to commit to more subsidised housing. 

The latest figures show a significant decline in new housing approvals to just 166,125 in the 12 months leading up to November. 

This decline, primarily attributed to rising interest rates and construction costs, has impacted consumer borrowing power and increased the cost of building new homes.

“We still see some further modest downside to both completions and activity levels that have yet to fully adjust lower, even accounting for the large pipeline of work under construction,” says Morgan Stanley economist Chris Read.

The private and community housing sectors are advocating for increased public funding to develop more lower-priced rental housing. 

The Property Council of Australia proposes reducing the withholding tax rate on commercial build-to-rent investments, which could result in an additional 10,000 affordable rental homes over a decade. 

“When you take that down to 10 per cent, you then incentivise the affordable housing component at no cost to government,” Property Council chief executive Mike Zorbas has told reporters. 

Affordable housing, distinct from social housing, targets key workers like childcare workers and teachers, offering them rentals at a fixed discount to market rates. Social housing, on the other hand, is aimed at low-income tenants reliant on social security. 

The federal government's recent budget includes a cut in withholding tax for offshore investors in build-to-rent projects to 15 per cent, but it is unclear if this includes an affordable housing component.

Additionally, the Community Housing Industry Association (CHIA) is pushing for a doubling of the government’s $10 billion Housing Australia Future Fund. 

CHIA chief executive Wendy Hayhurst suggests that mandatory inclusionary zoning requirements could facilitate more affordable housing.

Against this backdrop, Housing Australia chief executive Nathan Dal Bon highlights the potential of social and affordable housing as a viable investment, countering the stereotype of low returns. 

“There’s certainly no intention with this scheme for investors to take a haircut and that’s the way that we’ve approached this from day one,” he says.