Going global

During the heyday of the late 1990s, low-cost credit poured into social housing projects. But with the financial downturn, scarcity prevails and development prospects for affordable housing have narrowed considerably. Furthermore, shocks in global financial markets have left the public sector holding the baby - propping up vulnerable housing associations, restructuring projects at risk and ensuring the flow of housing subsidies - all to prevent the unthinkable: that private investment turns away from the sector and new supply comes to a halt.

At the International Social Housing Summit in The Hague on 13 October, I will be presenting the results of a report co-authored with Tony Gilmour and Vivienne Milligan, and recently published by the Australian Housing and Urban Research Institute.

In it we examine the strengths and weaknesses of different market-orientated strategies for providing affordable housing during the global financial crisis, and raise questions about their design. If the goal is to steer investment toward socially useful products and processes, how can we ensure that markets work for us in this way, and what kinds of incentives are necessary and effective under different conditions?

The report outlines how six developed countries approach this issue. Mechanisms examined include private debt finance in England; the tax-privileged savings deposit system in France; a mortgage guarantee scheme in the Netherlands; special-purpose banks selling housing supply bonds in Austria; a bond-issuing co-operative with public guarantees in Switzerland; and the low-income housing tax credit scheme in the US.

Of these, England ranked well in terms of levels of private investment, but poorly in terms of vulnerability and concentration of risk in the public sector.

The Austrian system of housing supply bonds has been successful in attracting long-term investors by making retail investment in limited profit housing tax deductible and has proved a safe haven for investors in troubled times.

The report shows how well-targeted investment coupled with add-ons such as rent caps and tax incentives, can boost supply and also promote affordability, thereby reducing pressure on rent assistance levels.

International examples cannot provide ready-made solutions for individual countries, but they can act as useful catalysts for creative policy making. England has been quite effective in attracting private-sector investment in the past decade. But the financial goalposts have changed, requiring major reform of social housing finance to deliver the outcomes when and where a well-housed society will require them for the coming decades.

Dr Julie Lawson is a senior researcher at RMIT University, Melbourne, currently based at TU Delft, the Netherlands

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