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The federal government does not know how much it is spending on the thousands of social and affordable homes green-lit by its housing agency, with most funding likely to be years away.
A Monday announcement that 13,700 new homes would be supported through the government's flagship Housing Australia Future Fund (HAFF) was made before grants were finalised and, in some cases, before successful applicants were told.
While a government spokesperson and industry sources said that was standard practice, it has left some uncertainty about the timeline for construction.
On Monday, Housing Minister Clare O'Neil accused the Coalition and the Greens of pushing back that timeline by delaying the establishment of the HAFF, which became law one year ago only after a difficult passage through parliament.
Housing Minister Clare O'Neil said the first round of funding would support more social and affordable homes than the Coalition built in a decade of government. (ABC News: Matt Roberts)
"If that had not happened, we'd be handing keys to tenants already in some of these properties," she said.
But figures provided to the government and obtained by the ABC show just 5 per cent of the approved projects are expected to be completed within one year. Most of the 13,700 are not due until mid-2026 at least.
| Estimated start and end dates for approved homes (%) | ||||||
|---|---|---|---|---|---|---|
| Earlier | 2024-25 | 2025-26 | 2026-27 | 2027-28 | Later | |
| Start | 7% | 32% | 41% | 15% | 5% | 0% |
| End | 0% | 5% | 28% | 38% | 25% | 4% |
Funding will flow slowly despite $500-million-a-year pledge
The bulk of government funding will also not flow until at least that time.
While the law requires that at least $500 million be made available from the HAFF each year for housing, plus a little extra injected by the government under a related housing initiative, it is up to the agency Housing Australia to decide how and when to spend that money.
It makes its decisions at arm's length from the government but is guided by government instructions which stipulate that it must offer a combination of zero-interest loans and long-term "availability grants".
The availability grants are paid annually to housing providers once their projects are complete for a term of up to 25 years.
The intention is to supplement the provider's revenue, making low-rent homes stack up when they otherwise would not.
The government says this is a more cost-effective way to support housing supply than building the homes itself, and it estimates it will unlock $92 billion worth of housing with a relatively small injection of money, giving it bang for its buck as it seeks to address a chronic shortage.
Inundated with offers
The first round of grant and loan applications was oversubscribed, with only one-quarter successful.
Most applicants were community housing providers, in many cases backed by institutional investors such as super funds, but the process was also open to private providers and state, territory and local governments.
Figures provided to the ABC reveal five in six of the approved homes will be apartments, with the remainder standalone houses or townhouses. Most will be one- or two-bedroom dwellings.
| Approved homes by type | |||||
|---|---|---|---|---|---|
| Studio | 1 bed | 2 bed | 3 bed | 4 bed | |
| Apartments | 567 | 4,607 | 5,553 | 777 | 38 |
| Houses and Townhouses | 0 | 98 | 432 | 1,135 | 535 |
There is a mixture of small and large projects. The 98 smallest projects have an average of 22 homes each, whereas the two largest ones have 1,416 homes between them.
| Approved projects by number of homes | |
|---|---|
| Up to 50 | 98 (2,161 homes) |
| 50-100 | 46 (3,290 homes) |
| 100-200 | 27 (3,958 homes) |
| 200-400 | 12 (2,917 homes) |
| 400+ | 2 (1,416 homes) |
Teething issues
The government encountered teething issues in ensuring Housing Australia had the capability to process applications.
The agency, which was initially set up under the Coalition to offer cheap capital to housing providers, has seen its headcount more than double under Labor as it has acquired new functions.
By mid-last year it had 79 full-time equivalent employees, including 26 with remuneration of at least $240,000.
It has also spent more than $30 million on private contractors in the past 18 months, including consultants, lawyers and IT services.
Monday's announcement about the first funding application round was several months later than initially planned, and Housing Australia executive Nathan Dal Bon told a Senate hearing in June some providers had found the application process difficult.
The government expects its next funding round to start within six months and to be finalised faster.
It also says the program will gain momentum over time as more homes are added each year.
Developers keen for cash
A survey conducted by law firm Herbert Smith Freehills (HSF) found community and private housing developers were overwhelmingly enthusiastic about the prospect of accessing long-term payments and interest-free loans.
But developers were sceptical that the government's target for Housing Australia to fund the construction of 40,000 new social and affordable homes in five years could be met unless states and territories reformed their planning laws.
They also face political uncertainty, with the Coalition committed to rolling back the fund should it form government.
The Coalition, which opposed the creation of the HAFF, has promised to roll it back if elected. (ABC News: Adam Kennedy)
That could threaten the viability of many of the projects, compounded by the fact that most of the developers who responded to the survey were also drawing on Housing Australia's cheap debt finance, making them doubly reliant on public support.
"The sector is supportive of more money to plug the funding gap needed to bring new social and affordable housing online. There's no doubt people welcome that," HSF partner Nicholas Carney told the ABC.
"It will be interesting to see whose projects got up and whose didn't. I think that'll be the question.
"This is day one. It will take time."