1 00:00:04,140 --> 00:00:06,569 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:06,660 --> 00:00:10,349 Sean Aylmer: Aylmer. Australia is in the grips of a housing affordability 3 00:00:10,349 --> 00:00:14,160 Sean Aylmer: crisis. Families are being priced out of rentals while house 4 00:00:14,160 --> 00:00:18,420 Sean Aylmer: prices are climbing again after a short post- COVID decline. 5 00:00:18,930 --> 00:00:21,480 Sean Aylmer: So is there a long- term solution here? Potentially one 6 00:00:21,480 --> 00:00:25,230 Sean Aylmer: that keeps a roof over people's heads, literally, and provides 7 00:00:25,230 --> 00:00:29,040 Sean Aylmer: an opportunity for investors too. Scott Langford is the Group 8 00:00:29,040 --> 00:00:32,370 Sean Aylmer: CEO of St. George Community Housing, which is a supporter 9 00:00:32,370 --> 00:00:34,889 Sean Aylmer: of this podcast. Scott is also a director of Power 10 00:00:34,889 --> 00:00:39,239 Sean Aylmer: Housing Australia, managing affordable housing across Australia, and the former 11 00:00:39,240 --> 00:00:42,240 Sean Aylmer: Chair of the International Housing Partnership, so knows what's going 12 00:00:42,240 --> 00:00:45,898 Sean Aylmer: on. He says the system here in Australia needs long- 13 00:00:45,900 --> 00:00:49,739 Sean Aylmer: term structural reforms. Scott Langford, welcome to Fear and Greed. 14 00:00:50,250 --> 00:00:52,530 Scott Langford: Thanks very much, Sean. Great to be talking with you and your listeners. 15 00:00:52,799 --> 00:00:55,440 Sean Aylmer: So just how bad is the housing crisis right now? 16 00:00:56,370 --> 00:00:58,260 Scott Langford: Sean, I think the fact that it's on the front 17 00:00:58,260 --> 00:01:02,099 Scott Langford: page of the newspaper, it's on TV, it's become the 18 00:01:02,099 --> 00:01:06,480 Scott Langford: barbecue discussion, is an indicator that the pressures of the housing 19 00:01:06,990 --> 00:01:09,809 Scott Langford: are being felt right across the whole community. And if 20 00:01:09,809 --> 00:01:12,990 Scott Langford: it's not affecting you personally, there's someone you know that's 21 00:01:12,990 --> 00:01:14,520 Scott Langford: worried about whether they're going to be able to pay 22 00:01:14,520 --> 00:01:17,369 Scott Langford: the mortgage or maybe worried about whether their kids will 23 00:01:17,550 --> 00:01:19,709 Scott Langford: be able to get into the market, or whether they're 24 00:01:19,709 --> 00:01:21,420 Scott Langford: going to find a place to rent or keep the 25 00:01:21,420 --> 00:01:23,878 Scott Langford: place to rent. So it's a massive issue and it's 26 00:01:24,090 --> 00:01:27,120 Scott Langford: starting to impact not just in the housing space, but 27 00:01:27,120 --> 00:01:30,779 Scott Langford: also employers who are struggling to find places for employees 28 00:01:30,780 --> 00:01:32,550 Scott Langford: to live, to keep their businesses running. 29 00:01:33,060 --> 00:01:37,050 Sean Aylmer: So is it worse now than normal, and if so, why? 30 00:01:37,800 --> 00:01:40,620 Scott Langford: I think it's a continuation of a pattern that we've 31 00:01:40,620 --> 00:01:43,619 Scott Langford: seen emerging over the course of decades, but it's particularly 32 00:01:43,620 --> 00:01:47,009 Scott Langford: acute at the moment. I think we see in Australia, 33 00:01:47,069 --> 00:01:50,580 Scott Langford: similar patterns to what's played out overseas, where the impact 34 00:01:50,580 --> 00:01:53,550 Scott Langford: of COVID and then the return of migration has had 35 00:01:53,550 --> 00:01:56,400 Scott Langford: a significant impact on the market. But really this is 36 00:01:56,400 --> 00:01:59,279 Scott Langford: a long- term pattern and what we're talking about is 37 00:01:59,700 --> 00:02:02,609 Scott Langford: decades of housing policy and related policy that have led 38 00:02:02,610 --> 00:02:05,039 Scott Langford: us to a place where more and more people are 39 00:02:05,039 --> 00:02:08,608 Scott Langford: struggling and more and more of our cities around Australia 40 00:02:08,880 --> 00:02:11,669 Scott Langford: are really at breaking point, where the way the city 41 00:02:11,669 --> 00:02:12,839 Scott Langford: functions is at risk. 42 00:02:15,240 --> 00:02:18,570 Sean Aylmer: What are the solutions? That's not exactly the easiest question to 43 00:02:18,570 --> 00:02:20,610 Sean Aylmer: ask. I suppose, firstly, what are the attempts that we've 44 00:02:20,610 --> 00:02:23,640 Sean Aylmer: made to fix it? And is anything working at the moment? 45 00:02:24,480 --> 00:02:28,830 Scott Langford: I think there's been really interesting policy interventions from time 46 00:02:28,830 --> 00:02:31,830 Scott Langford: to time by different levels of government. One of the 47 00:02:31,889 --> 00:02:35,339 Scott Langford: challenges and opportunities we have in Australia is that housing 48 00:02:35,340 --> 00:02:37,980 Scott Langford: policy is not set by any one level of government. 49 00:02:38,008 --> 00:02:41,459 Scott Langford: There are levers that the Federal Government, State Government and 50 00:02:41,459 --> 00:02:45,330 Scott Langford: local governments are responsible for, and very rarely have we 51 00:02:45,330 --> 00:02:49,769 Scott Langford: seen those work in a coordinated fashion. There's an approach 52 00:02:49,770 --> 00:02:52,559 Scott Langford: at the moment to develop a national housing and homelessness 53 00:02:52,559 --> 00:02:55,709 Scott Langford: plan and the federal government's proposed the establishment of a 54 00:02:55,740 --> 00:02:59,760 Scott Langford: national housing supply and affordability council, to start to create 55 00:02:59,760 --> 00:03:03,210 Scott Langford: a better way of integrating all of those levers. And 56 00:03:03,210 --> 00:03:05,910 Scott Langford: I think that's encouraging, but it's not going to deliver 57 00:03:05,910 --> 00:03:08,939 Scott Langford: relief in the short term. What we really need to 58 00:03:08,940 --> 00:03:11,849 Scott Langford: see is that those levers are pulled together. So planning 59 00:03:11,849 --> 00:03:16,529 Scott Langford: interventions, tax reform and settings that will encourage institutional investment 60 00:03:16,529 --> 00:03:19,560 Scott Langford: into our rental market, which can be a really important 61 00:03:19,620 --> 00:03:22,530 Scott Langford: aspect of structural ballast in the housing system. 62 00:03:23,220 --> 00:03:24,989 Sean Aylmer: So I want to get into what St. George Community 63 00:03:24,990 --> 00:03:28,740 Sean Aylmer: Housing does, where institutional investors can play in this, the 64 00:03:28,740 --> 00:03:32,490 Sean Aylmer: super funds, et cetera. But before we get to that, 65 00:03:32,580 --> 00:03:36,720 Sean Aylmer: is it a supply issue fundamentally? We just need more 66 00:03:36,720 --> 00:03:38,370 Sean Aylmer: houses, simple as that. 67 00:03:39,240 --> 00:03:42,660 Scott Langford: I'm always cautious about simple statements. It's a complex problem, 68 00:03:42,660 --> 00:03:47,220 Scott Langford: but absolutely, supply is the key part of the solution. 69 00:03:47,639 --> 00:03:50,400 Scott Langford: I'd add that it's the right supply in the right 70 00:03:50,400 --> 00:03:54,660 Scott Langford: places and at times it's targeted supply. There is no 71 00:03:54,660 --> 00:04:00,030 Scott Langford: evidence globally that the simply increasing general market supply is 72 00:04:00,030 --> 00:04:02,789 Scott Langford: going to solve the housing issue, particularly for lower income 73 00:04:02,790 --> 00:04:06,930 Scott Langford: households in Australia and increasingly for people in lower paid jobs. 74 00:04:07,469 --> 00:04:09,360 Sean Aylmer: Okay. So where does St. George, or how does St. 75 00:04:09,360 --> 00:04:12,480 Sean Aylmer: George Community Housing fit into this equation? 76 00:04:13,530 --> 00:04:16,320 Scott Langford: Our role is to work with government developers and investors 77 00:04:16,320 --> 00:04:20,130 Scott Langford: and bring together capital and capability so that we can deliver 78 00:04:20,130 --> 00:04:23,700 Scott Langford: more social and affordable and market rental housing. And then 79 00:04:23,700 --> 00:04:25,558 Scott Langford: we are there to operate it as a, what's called 80 00:04:25,559 --> 00:04:28,979 Scott Langford: a regulated community housing provider. So what that means is 81 00:04:28,980 --> 00:04:32,190 Scott Langford: that we're providing a service to people living in those 82 00:04:32,190 --> 00:04:36,178 Scott Langford: properties. We're professionally managing them, the properties, and we are providing a 83 00:04:36,180 --> 00:04:40,529 Scott Langford: service to our partners, both in government and investors to 84 00:04:40,529 --> 00:04:43,349 Scott Langford: make it all work together, so that we get better 85 00:04:43,349 --> 00:04:44,909 Scott Langford: housing outcomes for the longer term. 86 00:04:45,360 --> 00:04:47,219 Sean Aylmer: Stay with me, Scott, we'll be back in a minute. 87 00:04:47,219 --> 00:04:57,089 Sean Aylmer: I am talking to Scott Langford, Group Chief Executive Officer of 88 00:04:57,178 --> 00:05:02,009 Sean Aylmer: St. George Community Housing. On the investor side, do you 89 00:05:02,009 --> 00:05:05,428 Sean Aylmer: have many institutional investors? And when I say that, I'm 90 00:05:05,430 --> 00:05:09,690 Sean Aylmer: talking super funds, big fund managers, and if so, what 91 00:05:09,690 --> 00:05:10,680 Sean Aylmer: are the returns they're getting? 92 00:05:11,160 --> 00:05:14,550 Scott Langford: So we're starting to see the emergence of institutional investment 93 00:05:14,550 --> 00:05:17,669 Scott Langford: into Australian residential property. We're really at what would be 94 00:05:18,000 --> 00:05:22,649 Scott Langford: considered a pre- institutional market in Australia where compared to 95 00:05:22,920 --> 00:05:27,000 Scott Langford: overseas, where you might see 20 or 30% of real estate allocations 96 00:05:27,000 --> 00:05:30,659 Scott Langford: into residential, Australia is at perhaps 2 to 3% of 97 00:05:30,660 --> 00:05:35,428 Scott Langford: allocations. What we are seeing is that the thesis holds 98 00:05:35,428 --> 00:05:38,610 Scott Langford: that there is a place for long- term institutional investment. 99 00:05:38,610 --> 00:05:42,178 Scott Langford: And so St. George, we've got two primary partnerships at 100 00:05:42,180 --> 00:05:46,290 Scott Langford: the moment, one with AXA Investment Managers who've brought global 101 00:05:46,290 --> 00:05:49,980 Scott Langford: expertise from a very large European portfolio of residential and 102 00:05:49,980 --> 00:05:54,779 Scott Langford: importantly a very large investment into affordable residential in Europe, 103 00:05:55,290 --> 00:05:58,438 Scott Langford: and applied that thinking of the Australian market in a partnership with 104 00:05:58,440 --> 00:06:02,339 Scott Langford: us. Similarly, we've got a partnership with Lighthouse Infrastructure, a 105 00:06:02,339 --> 00:06:06,210 Scott Langford: funds manager based in Melbourne, who have developed a model 106 00:06:06,360 --> 00:06:09,450 Scott Langford: where we're able to deliver affordable housing in the market 107 00:06:09,928 --> 00:06:12,330 Scott Langford: on an ongoing basis for a period of up to 108 00:06:12,330 --> 00:06:16,949 Scott Langford: 10 years without any additional direct government support. So we're 109 00:06:16,949 --> 00:06:21,150 Scott Langford: starting to see these partnerships come together where those funds 110 00:06:21,150 --> 00:06:23,909 Scott Langford: are able to work with their investor base to get 111 00:06:23,910 --> 00:06:27,120 Scott Langford: an appropriate risk adjusted return. And whilst there's a range 112 00:06:27,120 --> 00:06:30,029 Scott Langford: of expectations, what I can say is that those returns 113 00:06:30,029 --> 00:06:33,089 Scott Langford: are appropriate to a sort of benchmark, and I think 114 00:06:33,089 --> 00:06:37,650 Scott Langford: there are opportunities to see a larger inflow of capital. 115 00:06:38,310 --> 00:06:41,488 Sean Aylmer: Presumably that we're thinking about housing in a different way 116 00:06:41,490 --> 00:06:44,670 Sean Aylmer: to what we have been. So is it things like build- to- 117 00:06:44,670 --> 00:06:47,789 Sean Aylmer: rent, those sorts of ideas that come into play here, 118 00:06:48,089 --> 00:06:50,339 Sean Aylmer: or is it a totally different way of thinking about 119 00:06:50,339 --> 00:06:52,409 Sean Aylmer: how we build and supply housing? 120 00:06:53,879 --> 00:06:56,219 Scott Langford: I think it's and and not an or. So build- to- 121 00:06:56,220 --> 00:06:58,770 Scott Langford: rent is a very important part of the evolution of 122 00:06:58,770 --> 00:07:04,020 Scott Langford: the Australian market. Unlike many places overseas, in Australia, we 123 00:07:04,110 --> 00:07:07,200 Scott Langford: typically have had the rental market made up of mom 124 00:07:07,200 --> 00:07:09,328 Scott Langford: and dad investors, and they will continue to play a 125 00:07:09,330 --> 00:07:13,800 Scott Langford: very important role in the Australian rental market. What institutional build- to- 126 00:07:13,800 --> 00:07:16,770 Scott Langford: rent will bring is a different lens and perhaps a 127 00:07:16,770 --> 00:07:21,030 Scott Langford: longer term alignment, where getting good quality rental returns is 128 00:07:21,030 --> 00:07:24,029 Scott Langford: as important as the long- term growth in the value 129 00:07:24,030 --> 00:07:27,929 Scott Langford: of the asset. So we think that's incredibly important. Some 130 00:07:27,929 --> 00:07:31,080 Scott Langford: of the longer term levers, the reforms to planning and 131 00:07:31,080 --> 00:07:34,380 Scott Langford: the efficiency of how we construct, they are also important 132 00:07:34,380 --> 00:07:37,590 Scott Langford: so that we can more efficiently produce more housing. Because 133 00:07:37,980 --> 00:07:40,199 Scott Langford: as you mentioned earlier, supply is a big part of 134 00:07:40,200 --> 00:07:40,890 Scott Langford: this equation. 135 00:07:42,660 --> 00:07:45,420 Sean Aylmer: So in terms of St. George Community Housing, you are 136 00:07:45,420 --> 00:07:48,480 Sean Aylmer: bringing, that's the institutional side. How do you work with 137 00:07:48,570 --> 00:07:53,250 Sean Aylmer: presumably local councils as well, to try and streamline some 138 00:07:53,250 --> 00:07:54,150 Sean Aylmer: of the processes? 139 00:07:54,660 --> 00:07:57,660 Scott Langford: So we've got a great relationship with all levels of 140 00:07:57,660 --> 00:08:00,990 Scott Langford: government, but if it took, particularly at local government level, 141 00:08:02,099 --> 00:08:05,159 Scott Langford: there is a genuine commitment from local governments that we 142 00:08:05,160 --> 00:08:08,490 Scott Langford: work with, to want to foster a diversity of housing 143 00:08:08,490 --> 00:08:11,370 Scott Langford: in the local government areas. So if I use city of Sydney 144 00:08:11,370 --> 00:08:15,120 Scott Langford: as an example, we have been able to purchase a couple of 145 00:08:15,210 --> 00:08:18,419 Scott Langford: sites from the city of Sydney. They were surplus land 146 00:08:18,420 --> 00:08:21,809 Scott Langford: sites where they had former depots, had identified it as 147 00:08:21,809 --> 00:08:25,320 Scott Langford: an opportunity to create a different type of housing product 148 00:08:25,710 --> 00:08:27,390 Scott Langford: and then they were able to work with us. We 149 00:08:27,390 --> 00:08:30,330 Scott Langford: brought together the various project partners and in the case 150 00:08:30,330 --> 00:08:34,500 Scott Langford: of one project in Redfern, we created 160 units right 151 00:08:34,500 --> 00:08:38,790 Scott Langford: opposite Redfern station, with a combination of social and affordable 152 00:08:38,790 --> 00:08:42,840 Scott Langford: housing outcomes. So there are fantastic opportunities for local government 153 00:08:42,840 --> 00:08:45,569 Scott Langford: to do practical things with their own land holdings and 154 00:08:45,570 --> 00:08:48,630 Scott Langford: funding, but also in the planning process to make it 155 00:08:48,660 --> 00:08:53,370 Scott Langford: more efficient, and to bring density done well as part 156 00:08:53,370 --> 00:08:56,550 Scott Langford: of the solution to increase good housing supply. 157 00:08:57,150 --> 00:08:59,190 Sean Aylmer: And how do you find the tenants, that sounds like 158 00:08:59,190 --> 00:09:00,780 Sean Aylmer: a silly question because there are so many out there, 159 00:09:00,780 --> 00:09:04,050 Sean Aylmer: but how do you match what the institutions want, what 160 00:09:04,050 --> 00:09:07,890 Sean Aylmer: local government wants, what St. George Community Housing wants and 161 00:09:07,890 --> 00:09:10,350 Sean Aylmer: what they need, with what tenants need? 162 00:09:10,710 --> 00:09:14,219 Scott Langford: We're fortunate, Sean, that we operate in a regulated environment, 163 00:09:14,219 --> 00:09:16,289 Scott Langford: and when I say we're fortunate to be in that 164 00:09:16,289 --> 00:09:18,780 Scott Langford: environment, what that means is that there are a range 165 00:09:18,780 --> 00:09:21,540 Scott Langford: of stakeholders who create the framework that ensures we are 166 00:09:21,540 --> 00:09:24,929 Scott Langford: doing things fairly and equitably, and that we are serving 167 00:09:24,929 --> 00:09:29,369 Scott Langford: the demand that is expected from different cohort groups. So 168 00:09:29,790 --> 00:09:32,700 Scott Langford: in the case of social housing, if we talk about New South Wales, 169 00:09:33,030 --> 00:09:35,429 Scott Langford: there is a common waiting list across the state for 170 00:09:35,429 --> 00:09:38,429 Scott Langford: people applying for social housing and we draw off of 171 00:09:38,429 --> 00:09:41,760 Scott Langford: that list based on the different typology. So look, people 172 00:09:41,760 --> 00:09:43,830 Scott Langford: looking for two bedroom house in a particular area and 173 00:09:43,830 --> 00:09:47,040 Scott Langford: we go to that list. In affordable housing, we always 174 00:09:47,040 --> 00:09:50,849 Scott Langford: look for eligible applicants who have a connection to the 175 00:09:50,849 --> 00:09:54,030 Scott Langford: local area. So for example, we've got a project in 176 00:09:54,059 --> 00:09:57,840 Scott Langford: Westmead at the top of the Westmead Health campus and 177 00:09:57,840 --> 00:10:00,870 Scott Langford: we were prioritizing people who have a connection to the 178 00:10:00,870 --> 00:10:03,599 Scott Langford: health jobs that are on the Westmead Health Campus. So 179 00:10:03,599 --> 00:10:06,960 Scott Langford: we've got about 80% of residents in that development, are 180 00:10:06,960 --> 00:10:11,129 Scott Langford: working in health or allied health, often in early stage 181 00:10:11,129 --> 00:10:15,390 Scott Langford: career roles or progressing into admin or other support roles 182 00:10:15,390 --> 00:10:18,090 Scott Langford: that make that precinct work. So what we're trying to 183 00:10:18,090 --> 00:10:21,600 Scott Langford: do is create a housing outcome and support the broader 184 00:10:21,900 --> 00:10:25,500 Scott Langford: objective of a thriving place, and making a place work 185 00:10:25,500 --> 00:10:26,460 Scott Langford: for everyone. 186 00:10:26,940 --> 00:10:30,390 Sean Aylmer: It's incredibly exciting, but sometimes does the enormity of the 187 00:10:30,420 --> 00:10:31,920 Sean Aylmer: task get a bit overwhelming? 188 00:10:32,550 --> 00:10:35,760 Scott Langford: I get excited by the challenge of the task and 189 00:10:35,760 --> 00:10:40,050 Scott Langford: I think Australia has been such a fortunate country and 190 00:10:40,050 --> 00:10:43,949 Scott Langford: the evolution of our housing story, and home ownership for a 191 00:10:43,950 --> 00:10:46,829 Scott Langford: long time has been the principle means of wealth creation 192 00:10:46,830 --> 00:10:49,500 Scott Langford: for a lot of people. The challenge and the opportunity 193 00:10:49,500 --> 00:10:51,270 Scott Langford: in front of us is how do we cope with 194 00:10:51,270 --> 00:10:55,140 Scott Langford: a shift where rental is becoming more of the mainstay 195 00:10:55,530 --> 00:10:57,689 Scott Langford: and how do we improve that experience and how do 196 00:10:57,690 --> 00:11:01,078 Scott Langford: we create mechanisms where people can afford to live in 197 00:11:01,080 --> 00:11:04,260 Scott Langford: proximity to places to learn, can afford to live in 198 00:11:04,350 --> 00:11:08,070 Scott Langford: proximity to places to earn an income? And I think 199 00:11:08,070 --> 00:11:11,730 Scott Langford: that there are multitude of reasons that it drives the 200 00:11:11,730 --> 00:11:14,460 Scott Langford: community and the business sector to work together to solve 201 00:11:14,460 --> 00:11:15,000 Scott Langford: this problem. 202 00:11:15,450 --> 00:11:20,069 Sean Aylmer: So presumably the business sector, institutional investors, Google St. George 203 00:11:20,070 --> 00:11:22,469 Sean Aylmer: Community Housing and I'm sure you are happy to talk 204 00:11:22,469 --> 00:11:23,310 Sean Aylmer: to any of them. Scott. 205 00:11:23,639 --> 00:11:26,490 Scott Langford: Look, absolutely. We believe the scale of this problem demands 206 00:11:26,490 --> 00:11:30,990 Scott Langford: great partnership and we're all for working with a range 207 00:11:30,990 --> 00:11:33,210 Scott Langford: of partners to get the best possible outcomes. 208 00:11:33,780 --> 00:11:35,550 Sean Aylmer: Scott, thank you for talking to Fear and Greed. 209 00:11:35,880 --> 00:11:36,569 Scott Langford: Thanks very much, Sean. 210 00:11:37,170 --> 00:11:40,139 Sean Aylmer: That was Scott Langford, Group CEO of St. George Community 211 00:11:40,139 --> 00:11:43,350 Sean Aylmer: Housing, a great supporter of this podcast. This is the 212 00:11:43,350 --> 00:11:45,570 Sean Aylmer: Fear and Greed Business interview. Join us every morning for 213 00:11:45,570 --> 00:11:48,360 Sean Aylmer: the full episode of Fear and Greed, Australia's best business 214 00:11:48,360 --> 00:11:50,910 Sean Aylmer: podcast. I'm Sean Aylmer. Have a great day.