This paper argues that sustainable and affordable finance provides a crucial pillar to support the provision of affordable housing in the long term. This finance can take on a variety of forms, comprising grants, public loans, commercial loans as well as shareholder equity. It can be facilitated by various forms of collateral, government guarantees, mortgage insurance, and tax privileges, often involving a specialist financial intermediary. Importantly, how this pillar is constructed influences the scale, pace, and quality of housing outcomes generated.

Unlike many other countries, Australia has not established a long-term vehicle to channel institutional investment into housing, despite clearly inadequate public and private low-cost supply, a situation that has been recognized by numerous reviews, such as the National Housing Strategy (1991-1992) and the Affordable Housing National Research Consortium (2001). The use of government bonds for this purpose has been a consistent feature of proposals by the research community (inc. Yates, 1994; Hall et al, 2001; Lawson and Milligan, 2007). This paper revisits the case for housing bond financing in Australia and supplements it with an analysis of similar but well-established bond financed schemes operating successfully in Austria and Switzerland. This analysis provides an exploratory basis for outlining the necessary features of a bond-financed model that would be appropriate for Australian conditions to support the sustainable growth of social housing and the broadening of affordable housing options for low and middle-income households.