Mr Barr said there was capacity to add build-to-rent requirements on top of current government targets for affordable housing, and projects with institutional investment could add 200 to 300 properties to the rental market at a time.

"A steady diet of build-to-rent products annually, well into the future, is the direction that we're heading in," Mr Barr said in an interview with the Sunday Canberra Times.

Mr Barr said he had been knocking on the doors of industry superannuation funds to attract investment in build-to-rent projects in the territory, pitching the ACT as a simpler jurisdiction to work in with fewer layers of government.

"Money is burning a hole in their pocket and they're looking to make some long-term social investments. They don't need, given where interest rates are, 7 to 11 per cent returns on these things; 3 to 5 [per cent] is fine, particularly over a 20-year, 25-year investment, with a capital gain potentially at the end of that," he said.

"It's worked in other cities. We should be able to make it work here."

Mr Barr said the ACT government expected it would need to provide more dwellings in coming years and was actively assessing its land-release program.

The government would consider putting conditions on land sales to compel developers to construct build-to-rent projects, or partnering with developers in land rent schemes, he said.

Mr Barr said if the government subsidised the cost of the land through a land-rent scheme, he would expect subsidised rental prices, which could be locked in for two decades.

"This is the section of the market that is not on Commonwealth income support. They've got jobs, they're just looking for something that is a little more affordable that they could lease for a longer period for a year and might be a stepping stone for them into first-home ownership over time," he said.

Mr Barr said he did not expect Canberra to become a majority rental city.

The housing market recovered faster than the ACT government expected following the Covid-induced recession, with Mr Barr previously telling the territory's parliament "basic economics" showed record low interest rates were fuelling an asset price bubble.

House prices in Canberra have risen by almost a quarter in the last year.

Mr Barr said there was room in the market for more medium density housing, to offer people more of a choice between expensive detached houses and high-density living.

"You could legitimately ask the question, is there enough land zoned for that sort of medium density? So not 10-storey apartments, but walk-ups, that are two- or three-storey, that have three to four dwellings in them, not 30 or 40 or 50 or whatever. There's your housing market challenge," he said.

The ACT government has previously hinted at its interest in growing the number of build-to-rent properties, but Mr Barr's comments signal just how strong the territory's commitment is.

It comes amid a growing push to increase the build-to-rent sector in Australia, especially in the wake of the coronavirus pandemic.

The NSW government last year introduced legislation to halve land tax payments for build-to-rent housing developers, but those schemes did not require any affordable rental component.

Mr Barr said any long-term concessions in the ACT would be linked to long-term rent outcomes for tenants that were below market levels.

READ MORE A.C.T. POLITICS:

The ACT's planning directorate has contracted consultants to undertake a feasibility study into whether build-to-rent could help to grow the supply of affordable housing in the territory.

Timing, industry appetite and suitable locations for the build-to-rent model are being examined as part of the $185,000 study undertaken by consulting firm Paxon Group. A report is due by the end of June.

The territory government has also flagged its first build-to-rent block sale with the option being considered for the former Northbourne Flats public housing site in Turner.

Build-to-rent developments are popular overseas - about one in four new properties in London are build-to-rent - but the concept has struggled to take off in Australia.

There has been an especially slow take-up of the build-to-rent model in Canberra. The city's first full build-to-rent development that wasn't social or student housing was only completed last year. It was a 107-unit complex in Amaroo.

Morris Property Group announced last month more than 280 units at its Stuart Flats redevelopment would be build-to-rent.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: