A new report has identified a way that could increase the country's supply of affordable housing, as well as help to solve Australia's growing homeless population problem.
The report by the Centre for Social Impact at the University of New South Wales found that a type of investment called a social impact investment (SII) had been effective overseas in tackling social issues, and had the potential to grow in Australia.
The institute reveals such investments have the potential to increase the supply of affordable housing, increase social housing supply, as well as act as an incubator for the government to trial ways to provide new services.
The report's lead author Kristy Muir said with the number of people in Australia on waiting lists for social housing growing, new options needed to be explored.
"There's more than 200,000 people on the housing waiting list and you also have 100,000 people who are homeless on any given night," she said.
"SIIs basically aims to achieve two things: a social and a financial return, so by default, they intentionally aim to have a social impact."
The report looked at models of SII that have been successful overseas in countries such as the US and UK, including models that use investment funds to finance new property, or community housing providers reinvesting profits into affordable housing.
While SIIs are relatively new in Australia, it's expected the investments will increase in the next decade, growing from an estimated $2 billion worth of investments in 2013, to $32 billion during the 2020s.
"It's still fairly new in Australia, and it's been growing at a much greater rate in the US, but we are seeing significant growth," Professor Muir said.
"If you couple that with a model of affordability, it's a really effective way to increase the availability of housing and minimise the barriers that investors are currently facing."
The report also found that SIIs that combined different financial models may help to reduce risks for investors looking to put their money into social housing projects.
Despite the befits being touted in the report, Professor Muir said SIIs shouldn't be seen as the only solution to Australia's affordable housing problem.
"It's an appealing model, but it's important to remember that we are dealing with people's lives," she said.
"Our most vulnerable have complex needs, and we need to be careful we're not paving the way for future harm if these investments don't work out. This is one of the key reasons why government has an important role."
The report is the first in a series of three set to be released by the centre on the topic.