Australian housing: can infrastructure unlock the crisis?

The ‘lucky country’ has been blessed with an abundance of natural resources. From industrial metals and ores to precious stones and fossil fuels, Australia has a wide range of commodities. These assets have driven economic growth and prosperity for the majority of its short history as a nation. But success doesn’t come without challenges. A growing population and high demand for housing mean that Australia finds itself with a serious shortfall of available and affordable homes. It’s a similar story for many other Western nations, with politicians now scrambling for solutions.

Solving the housing crisis is essential to ensure that all Australians have access to safe, secure, and affordable housing. In response, Australian Federal and State governments have launched a range of housing stimulus programmes, aimed at encouraging private-sector investment and accelerating housing development. 

Housing stimulus models across Australia

Australia’s housing stimulus programmes vary across federal and state levels, each with different approaches to risk transfer and delivery.

Can they deliver? 

Encouragingly, each of the programmes has begun to deliver on the promise of more affordable housing for communities. Commercial banks have accepted the programme structures, and the more dynamic segments of the institutional investor market are meeting funding requirements.

The scale of potential investment opportunities across all four programmes is appealing, but one size does not fit all. HAFFF, Q-CHIP, and AHPP mesh the dynamic nature of property development with the disciplined structuring of public infrastructure investment.

The GLM is the closest to a traditional pure-play PPP, but it still requires analysis of complex contractual arrangements, multiple revenue streams, and exposure to market rental risk. Bidders estimate how much rent they expect to collect and how it will grow over time. This helps to forecast steady, inflation-linked returns. Key risks—such as construction delays or maintenance issues—are passed on to expert subcontractors. The contract also includes protections in case of unexpected events or disasters, or if the government terminates the agreement early.

Affordable, efficient and sustainable

 For investors targeting long-term returns alongside a contribution to sustainable objectives, the Australian programmes present an attractive opportunity. Affordable rents are set significantly below typical market levels, which helps people on lower incomes achieve a more comfortable standard of living.

In addition, the models typically aim for top-tier environmental certifications, such as the Nationwide House Energy Rating Scheme (NatHERS) and Green Star ratings. This results in energy-efficient buildings that not only benefit the environment but also reduce running costs for tenants.

Aberdeen Investments’ sustainable social housing in Melbourne

At Aberdeen Investments, we are already putting this into action, as the largest institutional investor in the Victorian Government’s second GLM project (GLM2), which is now well into the construction phase.

Using the GLM structure, our infrastructure team has backed a project aimed at revitalising social housing across Melbourne. The initiative aligns with Aberdeen Investments’ commitment to the United Nations’ Sustainable Development Goals (SDGs) (in particular, SDG 10: Reduced Inequalities and SDG 11: Sustainable Cities and Communities), by addressing the acute need for affordable housing.

The GLM2 project, led by Homes Victoria, aims to replace 502 ageing homes with 1,370 new, modern residences that are designed for sustainability and lower energy costs. The development is segmented into four areas: Bluff Road in Hampton East, Essex Street in Prahran, Barak Beacon in Port Melbourne, and Simmons Street in South Yarra. This expansive redevelopment plan will not only deliver 659 social homes, but also introduce 182 affordable rental homes and 529 market-rent homes which includes specialist disability housing.

Construction is progressing well. In Prahran, where both building structures are now complete and the internal fit-out of the apartments is underway, one of the two buildings - comprising 86 new social housing apartments - has been specifically designed for women and children who are experiencing housing instability, financial hardship, or escaping family violence.

Final thoughts…

This housing initiative provides an excellent example of how our investment can lead to socially and environmentally sustainable infrastructure. By using our expertise in infrastructure investment and partnering with experienced consortium members, we are helping to deliver real-world outcomes that are sustainable, inclusive, and designed with community wellbeing in mind.

It’s a strong example of the impact infrastructure can have - both on communities and on national housing targets. For the full case study and other examples of our investments, see our 2025 Sustainability Update, published today alongside this article.