Super funds profiting off rent? What you should know about the new affordable housing initiative

A row of affordable housing in a tropical environment.

Under a new partnership, major industry super funds are stepping up to invest in affordable housing, aiming to tackle Australia's housing shortage.

Central to this effort is the National Housing Accord, a joint venture that brings together federal and state governments, superannuation funds and the construction sector. Their goal is to significantly increase the supply of affordable housing across the country.

The federal government has committed $350 million as a starting point, with the aim of building 10,000 affordable homes within five years.

This strategy seeks to make it financially viable for super funds to back these housing projects, offering incentives to narrow the gap between the returns from affordable housing rents and standard market-rate investments. Leading this initiative on the super side of things are Cbus Super, CareSuper, Hostplus, Rest  and industry super fund-owned IFM Investors.

It’s a significant move, designed to draw major investments from the deep pools of superannuation capital into the housing sector.

Should super funds be involved?

While the idea of using super funds for affordable housing is innovative and could indeed drive housing development, it also brings up several concerns. 

For instance, there's the ethical question of whether super funds should profit from rental income, especially when global trends suggest institutional investments can make home ownership harder for individuals. 

Additionally, this move opens up questions about the government's future plans for using super funds' capital for other public projects, potentially setting a precedent for accessing these funds beyond their primary purpose of securing retiree futures.

As this plan rolls out, it's key to keep an eye on three things: what it does to the housing market, how super funds are doing, and above all, making sure retirees' savings stay safe and grow. 

For super fund members

It's essential for super fund members to stay informed about how their investments are being allocated, especially with the new focus on affordable housing. Here's a straightforward guide to finding out if your super fund is part of this effort and what it means for you:

  • Stay updated. Regularly check your email or account for any updates from your super fund. They're required to keep you informed about significant changes or new investments.
  • Website details. Super fund websites are a reliable resource for detailed information on their investment strategies and specific projects, including any involvement in affordable housing.
  • Direct inquiry. If you can't find the information you're looking for online or in updates, don't hesitate to contact your super fund directly for answers.

Knowing where your super is invested is crucial for keeping track of your financial security. With the new move towards investing in affordable housing, it’s especially important to be aware of how these decisions align with your long-term financial goals.

Interested in learning more about super? Browse our superannuation guides hub and start planning for your future now.