This report, commissioned by ACT Shelter in 2021, shows that the costs of investing in social housing are substantially offset by avoided costs in health, justice and welfare systems: for every dollar invested in low-cost social housing, the government recoups 57 cents through welfare, health and justice savings, and around 30 cents for higher-cost developments.
Date Published: 01 Aug 2021
Authors: Jim Davison Nicola Brackertz Tom Alves
ACT Shelter commissioned the Australian Housing and Urban Research Institute (AHURI) to investigate whether providing direct access to planned, sustainable, long-term housing options for the homeless population, and those at risk of homelessness, in the ACT is a more cost-effective strategy for the government than relying on crisis responses. This is stage 2 of “Scoping the costs and benefits of affordable housing in the ACT: Stage 1 report” 2020.
In the ACT, most funding for social housing is directed towards public housing. Government funding for community housing in the ACT is generally small and focused on recurrent funding.
The costs of providing community housing are generally lower than public housing. Public housing costs government around $55,300 per dwelling per year (operating plus capital costs) (Productivity Commission 2021). One estimate of the average cost to CHPs of operating existing community housing is $46,900 per dwelling per year.
The cost of developing new community housing for long term affordable rental depends on land costs, rents charged, the size and type of the housing and the availability of subsidy from government or developer sources. Nevertheless, we find that the funding gap (i.e. annual cost of developing a unit of housing net of rental and other revenues) is relatively low for some forms of housing.
The case histories of people experiencing homelessness in the ACT who contributed to this study revealed the inadequacies of the present system of reliance on temporary and crisis accommodation and highlighted the importance of opening pathways to long term housing.
Providing more long-term social housing in the ACT has the potential to result in significant cost savings to government. While the costs of developing new social housing are substantial, this report shows that the net costs of investing in more social housing would be substantially defrayed by the avoided costs in health, justice and welfare costs that would occur through these investments.