NRAS investors can expect to benefit from the annual NRAS Incentive, rental yields and capital gain.

NRAS is intended to be a commercial, profitable investment for participants, while also assisting Australia to increase the supply of affordable housing.

With higher returns on direct residential property than returns on office or industrial property over the last 10 years,¹ residential property can be a profitable investment.

While global house prices have fallen substantially globally, the Australian housing sector has shown resilience, primarily due to strong fundamentals – low vacancy rates, high population growth, insufficient housing stock, high employment and sound lending practices.

Demand for residential property is high with the National Housing Supply Council’s State of Supply Report 2010 estimating a current housing supply deficit of 178,400 homes across Australia.

Partly due to the shortfall in supply, the residential rental market represents a good long-term investment. Independent financial modelling of the NRAS Incentive shows that it can provide market rates of return at levels that are strongly competitive with other asset classes.

Compared with a conventional residential investment property, in certain markets the NRAS Incentive can provide a better cash return to investors than the receipt of full market rent.

In addition, investors are able to apply property expenses and non-cash deductions and allowances against a lower assessable rental income, increasing the negative gearing benefit.

NRAS can counterbalance the risk and volatility of equity markets and assist in providing a balanced portfolio. It offers great flexibility, with investors encouraged to develop portfolios with diverse dwelling types across different locations.

With more than 1.5 million households eligible to rent NRAS properties, the vacancy risk is negligible.