The below speech was delivered by NAB Group Executive Corporate & Institutional Banking, Cathryn Carver at the Impact Investment Summit Asia Pacific on 26 March 2025 in Sydney: 

 

Affordable Housing is a challenge that is acute and urgent.

This crisis point we’ve reached is the price of inaction.

Today, I want talk about where we currently stand, the need for systematic change, and sustainable investment solutions.

NAB CEO, Andrew Irvine, told an audience of business leaders last week that Australia’s housing crisis doesn’t make sense.

We are a lucky country. Housing demand is high, but we have an abundance of land and determined developers and housing providers.

Yet here we are. Still talking about the same issue year after year without having made any meaningful impact.

There is plenty of evidence that show the problem is intensifying – I’ll come back to that shortly.

I don’t want to understate the complexity of the housing crisis.

But we cannot continue to deny – or just keep talking about – the systemic issues that are stifling solutions.

We need action. Big changes need to be made, including:

• Speeding up planning approvals and removing red tape for developers to get traditional homes built faster
• Driving innovation in terms of housing design, modularisation and new construction methods to rapidly build up capacity
• Fixing the availability and the cost of skilled labour
• Ensuring the Housing Australia Future Fund is suited to the challenge
• And pushing banks and other financiers to create new funding structures that help offset risks and unlock scale

Only then will we boost productivity and create enough certainty to attract much-needed capital.

Creating sustainable solutions is bigger than any one bank, business, Government department or not-for-profit.

And therein lies the point.

Individually, we’re making small amounts of progress, but it’s nowhere near enough.

We need to stop competing or choosing which solution is best, and instead look at ways to add and activate many options.

We need to fix the system and work together to create something bigger, better, more impactful.

If we can’t get that right, then we are part of the problem.

 

For the past five years I’ve been involved in NAB’s Affordable Housing Council as both Chair and now as the Group executive sponsor.

I speak to our specialist bankers and our clients – whether that’s developers, investors or funds – almost every day.

And I’ve been out on the road with our community partners, developers and construction companies working in the housing sector.

For everyone involved, the state of housing in Australia sparks both passion and frustration in equal measure.

The stark reality is that we simply don’t have enough affordable, appropriate and safe homes for Aussies in need.

This impacts the more than 170,000 households currently on public housing waitlists, and over 120,000 Australians who experience homelessness each night.

But it also affects:

• essential workers, who need to be close to the schools and hospitals they work in
• regional and rural communities, including First Nations people who are disproportionately represented
• an increasingly vulnerable segment of the population, women over 55
• and, more and more, median-income families, singles and young adults – not just low-income households.

Affordable housing is no longer solely a poverty issue; it has become a mainstream, cost-of-living issue.

You only have to look at Redbridge research from February, in which 73% of people said housing affordability is important for their vote in the upcoming election, to see how wide-spread the issue really is.

Unfortunately, at the same time, construction rates for new homes are getting slower.

Research from the Productivity Commission found it takes 60% longer to build a single detached house than it did 10 years ago – the average build time is now just short of 11 months.

The construction of apartments is not much better – they are taking 50% longer, or around 28 months to complete.

As a result, developers can’t make the numbers work.

We shouldn’t be surprised given the construction industry is hamstrung by complex and slow planning approvals, unfavourable zoning and land release processes and a high regulatory burden, including navigating multiple layers of Government and various departments

That’s before we consider the workforce challenges including attracting and retaining skilled workers, or the reported issues with certain union agreements inflating wages and increasing costs on government projects making construction more expensive.

And we can’t forget the incredible cost burden of construction materials, not to mention our tax structures.

A report published earlier this month by the Housing Industry Association found regulatory costs, statutory taxes and infrastructure charges made up 49% of the total outlay made to acquire a new house & land package in a Greenfield estate in Sydney. While some of our Victorian developer clients are quoting more than 50% of development costs are due to state taxes.

This makes them uneconomical.

Many construction businesses just can’t survive.

More than 2,300 companies including builders and their subcontractors – went into insolvency between July 2024 and February 2025. That’s up 25% on the previous year, with cost blow outs, delays, interest rates and labour challenges cited as the main reasons why.

With all this in mind, it’s no wonder we’re tracking well below the Government’s required 240,000 new homes per year to meet the National Housing Accord’s target of 1.2 million homes by 2029.

The Government has good intent. But despite their best efforts to meet individual targets or unclog bottlenecks through programs such as NSW’s Community Housing Innovation Fund or Victoria’s Ground Lease model.

Or the Queensland government’s commitment to unlocking church and charity-owned land for much-needed community housing.

We continue to be tied up in lengthy processes, deals are often taking years to realise, and we are just not moving the dial.

 

I don’t come to work to accept the status quo and I don’t think you do either.

We’re here because we are purpose-led, passionate leaders. We’re innovators and problem solvers and because we want to see action.

At NAB we have looked at the ways we can bring various tools together to maximise our impact – through our lending, philanthropic, social and political, and investment muscle.

We’re taking action in a number of ways, including:

• Lending a further $6 billion of financing into the affordable housing sector by 2029.  I’m pleased to say as at end of the 2024 financial year, around $4.5 billion is already committed.
• Exploring innovative financing solutions, including social and sustainability bonds, to increase capital flows for community housing providers.
• And, today, we’re announcing the establishment of our own Impact Investment Fund through NAB Foundation – I’ll share more on the Fund in a moment.

I also want to share how some of NAB’s clients and partners are innovating and adapting to meet the growing demand for housing.

A few interesting, recent examples include:

Local: Residential, who are one of the leaders in the Build to Rent sector. In total, they are building more than 1,300 apartments around Melbourne, and what we love about these projects is that they all have a 10% social housing allocation.

Interestingly, we’ve seen this style of development work incredibly well in other jurisdictions. Approximately 12% of all accommodation in the US is build to rent compared to an estimated 0.2% of the Australian residential property market

The opportunity to build this asset class in Australia is immense. It’s been really pleasing to see the NSW and Victorian State government introduce substantial land tax reductions and concessions for eligible build to rent developments over the past few years, and for Queensland to have followed suit.

Junction Housing is doing wonderful work with modular housing – among other projects – in South Australia

Impressively, Junction is supporting around 10,000 South Australians every year. Their Tiny Homes Housing Project, in particular, which uses modular construction techniques is truly innovative, not to mention it’s providing a much-needed lifeline for vulnerable young people.  We’re so proud to be financing the great work they do.

Modular housing is another new asset class that can solve housing challenges, given the construction velocity. We welcome the recent announcement from the Government of a $54m investment to help supercharge prefabricated and modular home construction.

And last, but certainly not least, Assemble Housing. A Certified B Corporation, Assemble is backed by majority owners, AustralianSuper and HESTA.

They develop rent and purchase models to help people on all income levels into quality houses in central locations, especially essential workers, and are the largest recipient of HAFF funding, for around 2,700 homes

Just this week we closed our first deal with Assemble to support their new 284-dwelling development in Brunswick, Victoria. This is start of an ongoing partnership, and we’re excited to help them deliver more than 1,000 Built-To-Rent-To-Own homes.

These projects illustrate the variety of innovative approaches being used by just a handful of our customers who are navigating Government schemes, processes and bureaucracy, and pulling out all the stops to raise capital through investors, funds and philanthropists.

They are the success stories.

But even across these projects – we’re talking few thousand new homes in total. Not nearly enough to meet the needs of the long list of people I mentioned earlier.

We need scalable solutions to really address this housing issue.

This means removing the systemic barriers and challenges that are slowing down progress.

One of which is getting the capital stack to, quite frankly, stack up.

 

All developers talk to the difficult market conditions at the moment.

It’s hard enough to get traditional commercial projects to stack up with slow planning approvals, increased construction costs and ongoing cashflow challenges for builders and subcontracts.

So, to get a large-scale social and affordable housing project appropriately financed is near impossible.

But it’s not because the money isn’t there.

On the contrary:

• The Housing Australia Future Fund has committed $10 billion
• State Governments are also chipping in – The Queensland Housing Investment Fund I mentioned a moment ago is worth $2 billion.
• The Commonwealth provided a one‑off $2 billion payment to states and territories through the Social Housing Accelerator.
• AustralianSuper and Hesta, as majority owners of Assemble Housing who I mentioned earlier, have committed to a 10-year, $15 billion investment pipeline for housing development.
• And as I said, NAB has $6 billion slated.

That’s at least $35 billion dedicated to housing in those few examples alone.

But the labour issues, project costs and process roadblocks put pressure on a financial market that is already constrained by inherent risk and return profiles.

This is true for government agencies who have a limited risk appetite and lengthy approval processes.

It’s true for lenders with traditional LVR criteria and institutional investors with a fixed view of normalised financial returns.

And it’s certainly true for Super funds who are obligated to maximise returns for members, so as not to jeopardise their retirement income. These funds simply cannot compromise financial returns for a social benefit.

All the while, the processes to allocate available Government funding, including the HAFF, are complex to navigate and far too slow.

Consequently, many private groups we’re talking to now view these processes as too hard and investor confidence is dwindling.

For the most part, we’re only channelling funds into far ends of the capital structure.

Housing Australia and commercial banks, like NAB, are providing the senior debt, while Government support, in limited cases, is topping up returns to attract what little equity might be available. Though for community housing providers, who are often asset rich but cash flow poor, their equity layer is often almost non-existent.

What’s left is a gaping hole in the middle.

So, it begs the question…

How can we reimagine funding structures to consistently and effectively crowd capital into the Mezzanine layer.

And, how can we make these investment solutions sustainable.

 

Let’s talk first about private capital.

Last year, Herbert Smith Freehills surveyed 88 Australian senior executives from Community Housing Providers, Private Capital and Property developers, that are directly involved in making decisions about social and affordable housing.

35% of respondents said they believe that achieving the government’s housing target will only be possible with private capital investment.

But this has historically been easier said than done.

Often social and affordable housing projects fall at the first hurdle – they can’t get the right return and risk profile to attract private or institutional capital in the first place.

This is where Impact Investing plays a key role to drive much needed private capital into the social and affordable housing sector.

I’m not just saying that to play to this audience. As I mentioned earlier, we’ve launched our own Impact Investment Fund through the NAB Foundation.

I’ll note that this isn’t our first foray into Impact Investing. We established a $1 million Impact Investment Grants Program in 2015 and were involved the Victorian government’s first Social Impact Investment in partnership with Sacred Heart Mission in 2018.

We’ve drawn on those experiences in creating our new Fund, into which $25 million of the NAB Foundation’s total capital has already been allocated.

We’re on track to increase this to $50 million by October 2026.

Investments will focus on NAB’s sustainability pillars: Indigenous Economic Advancement; Climate Transition; and, of course, Social and Affordable Housing

Importantly, I want to make two key points about the Fund.

First, this is a true impact fund that will invest in opportunities that intentionally generate a positive and measurable social and environmental impact alongside financial returns.

Second, the fund has a return objective which recognises that to generate impact in certain areas (including housing) necessitates the acceptance of a lower than market rate of return and/or a higher level of risk compared to an equivalent investment which does not target impact.

We’ve deliberately established a specialist Investment Committee, chaired by Ben Smith, Head of Impact Investing at Paul Ramsay Foundation to objectively guide the fund’s investment strategy.

All of which will be overseen by JB Were as NAB Foundation’s investment manager.

 

The second investment stream we need to tap into is patient capital, especially via superannuation funds.

I had the privilege of joining the delegation at the Australian Superannuation Summit in the US last month.

Today, Australia’s super assets total approximately $2.8 trillion. As one of the largest and fastest-growing pools of retirement savings in the world, this is expected to reach US$7 trillion by 2043.

While the conversation in the US was geared towards bilateral partnerships and international investing, there will always be a strong desire for domestic investment, especially in assets and projects that have direct benefit for fund members.

In the current climate, there are but a few sectors that I believe could deliver both financial and economic benefits to members like the housing sector.

But we need to improve scale and make it easier to achieve market-based returns. IFM investors, the global institutional investment manager, also see the opportunity.

They outlined four recommendations in their blueprint for accelerating industry super investment in Australia’s housing supply, published in December.

In it, they’ve also called for a review of the HAFF: recommending funding be doubled; allowing large-scale bids; and aligning state and federal mechanisms and incentives to improve the pace of the scheme.

I was also pleased to see a call for a regulatory framework to support modular housing, which is aligned to NAB’s housing strategy.

But importantly, it concludes that if we get the policy settings right to enable just 0.5% of industry super assets to be invested in social and affordable housing, we could see more than $15 billion invested and around 100,000 homes built by 2030. All while delivering strong, risk-adjusted returns.

Given the urgency of the housing crisis, IFM says there has never been a better time for industry super to invest in housing.

I think we’d all love to see that happen.

 

The final investment focus I’ll invite you to consider today will cost you nothing but time. It’s the investment of intellectual capital.

Through NAB’s partnerships with some of the community housing providers we’re finding we can add increased value by sharing our expertise on risk and due diligence practices, or project financing structuring, for example.

These are skills, insights and processes we take for granted because we utilise them every day, but for our charitable and not-for-profit partners, who are navigating complex and multi-stakeholder projects, this knowledge can be a game-changer.

I’d go one step further and say the benefit of shared knowledge is not limited to housing providers. Greater collaboration is valuable for all of us, and it unlocks our ability to work together to solve this big complex problem that is the housing crisis.

 

By now I hope you can tell how passionate I am about addressing the challenges in the affordable housing landscape and finding sustainable solutions.

It’s not just me, I stand here representing NAB and JBWere, who for more than a decade have been actively working on social impact initiatives.

We have quite literally spent thousands of hours over the years exploring solutions.

When you also consider how much human capital is spent by Governments designing the HAFF and other schemes, by developers, by community housing providers, fund managers, real estate investors, and all the other parties, it’s mind boggling that we are yet to find any breakthrough solutions to address the housing crisis.

We need to stop just talking about it. We need to take action.

To get consistency and alignment in Government policies to enable market returns and to give large institutional investors the confidence to invest.

To make planning processes faster and simpler, and to accelerate large-scale developments.

And to drive down costs and create innovative funding models that are less dependent on government subsidies, and more sustainable over the lifecycle of a development.

And we need this to happen now. Because if we’ve learned anything over the past few years, it’s that unless we can make meaning changes the issue is only going to get worse.

And by default, we become part of the problem.

So, please spend the next two days getting inspired, making meaningful connections, and leave the conference with a commitment to take action.

Thank you.