Caryn Kakas: What role do you think home ownership plays in delivering better economic and social outcomes for communities?
Michael Sukkar: In a broad sense, we think security of housing is extraordinarily important for healthy and stable communities. All of the data clearly indicates that if you've got security of either home ownership or rental, it provides stability and certainty. If you're able to own your own home, it also provides significant opportunities to produce stability in a financial sense. The data is also very clear that people who enter retirement and don’t own their home face a huge financial disparity.
"The statistics are endless that show the positives of home ownership or security of home.” - Sukkar
So there's a financial component but there’s also a social component. The social importance of having that stability of tenure and the stability of home ownership in fostering prosperous, stable households. Which has a whole heap of flow on benefits - whether it's education or in health. The statistics are endless that show the positives of home ownership or security of home.
CK: Establishing the National Housing Finance Investment Corporation (NHFIC) was quite a significant milestone. In your view, how do you see this agency best supporting better housing outcomes?
MS: One year on, it's clear that NHFIC has done a huge amount in refinancing debt for community housing providers, bringing the average debt cost down quite significantly.
It also has the national infrastructure facility - an opportunity to unlock difficult projects in the social affordable housing space. We are examining other ways to partner private capital with community housing providers and national, state and local governments. At the moment we have a bond aggregator which funnels government-backed guaranteed debt to bring down debt costs and we have an infrastructure facility to help projects get off the ground that otherwise wouldn't happen. So the scope of NHFIC is growing.
NHFIC will also be administering the first home loan deposit scheme from 1 January 2020 and our vision for NHFIC is that it’s remit will grow over time as there are opportunities and holes in the market, so to speak, that make sense for NHFIC to enter.
Ultimately, NHFIC’s remit is to get more affordable housing on the ground. It's as simple is that. And we're very pleased with what it's accomplished in just under 12 months including a successful first bond issuance of over $A300 million and 560 new dwellings that are directly referable to that. We're excited about what more it can do in the future.
CK: How do you see the first home loan deposit scheme helping first home buyers into the market?
MS: As ANZ's housing affordability report confirms, the time it takes to save for a deposit has become increasingly long. In our major capital cities, it can take up to 10 years to save for a full 20 per cent deposit. The first home loan deposit scheme is going to bring that forward for 10,000 people each year by ensuring that, through a government guarantee, they're able to access finance earlier.
We think it's an important acknowledgement of the main crunch point for potential first home buyers. Yes, there are always issues around affordability for first time buyers, but quite particularly at the moment we've got young people who are in very stable employment, who are - all other factors being equal - very good potential customers. And they are just unable to get a loan or have to spend a significant amount of money on lenders mortgage insurance, which is a barrier in itself. There are also regional and capital city price caps in the scheme which makes it targeted to the people who need it most.
It will certainly help those 10,000 people but more broadly it will help further our agenda which is to make it easier for first time buyers to get into the market in whatever way we can. However, it’s worth noting that the best way to do that unquestionably is to get more supply to the market. Everything we want to do is about getting additional supply in.
CK: What support can the financial sector give to the all levels of government in terms of improving access to housing for Australians?
MS: It's been quite a traumatic time for the banking sector obviously with the Royal Commission and the very public way in which banks are being excoriated for certain activities. But now it's time to get back to business, which is the banks being the arteries of the economy.
I believe the way to do that is to get credit flowing. The health of the economy and the housing market is directly linked to the ability of people to get finance and to be able to do what they need to do in their lives. We understand the constraints and the regulatory environment that can be an impediment to some of that but we still think, broadly speaking, the opportunities are there for the needle to be grasped.
We want to see credit out there flowing. We want to see small businesses, big businesses, individuals, first home buyers, people who need to get finance to have a realistic opportunity to do so. The more credit flows in a sensible and regulated way, the better it will be for everyone including people trying to get into the housing market.
Caryn Kakas is Head of Housing Strategy at ANZ
This article is an edited transcript of a conversation with the National Housing Minister following an ANZ event launching the latest ANZ-CoreLogic Housing Affordability report. You can read the full report here.