Impacts of the National Rental Affordability Scheme on rental housing investment: Changes in investment profiles and investor satisfaction

INTRODUCTION
In Australia, as is the case for many countries around the world, housing affordability is a major problem affecting families on or below average incomes. The impact is particularly severe in the major capital cities such as Sydney and Melbourne. Projections suggest that in the next decade median house price in these cities will exceed one million dollars. To increase the supply of affordable housing, the Australian Government, in partnership with all state governments, initiated a National Rental Affordability Scheme (NRAS) in 2008. One of the key objectives of NRAS is to increase the supply of new affordable rental housing throughout Australia. In light of this target, this paper conducts a study of NRAS investors to identify the extent to which this objective has been achieved. Therefore, the aim of this paper is to review the net impacts of NRAS on housing investment in Australia. Specifically, four key issues are investigated, namely profile of investors, investors’ investment portfolios prior to and after the introduction of NRAS, investors’ perception of NRAS and impacts of NRAS on investment and tenancy choices. The paper evaluates the effectiveness of the program on influencing housing investment patterns, which can potentially be a useful template for future housing policies and initiatives of other countries.This paper comprises four sections. Firstly, the paper provides background information on the housing affordability crisis in Australia and on the NRAS program. The paper then discusses the methodology and assumptions employed in this research. Thirdly, the paper presents and discusses the findings of NRAS impacts on the profile of investors and their investment portfolio and their satisfaction with the program. Lastly, the paper concludes with key impacts of NRAS on housing investment in Australia.