A new report says innovative investments should be used to lift the supply of affordable rental housing.

The RMIT finance report calls for the establishment of a committee in combination with a well-structured guarantee to make it attractive for long term managed funds to invest in new affordable and well-targeted social housing infrastructure.

The report; Enhancing affordable rental housing investment via an intermediary and guarantee, was released ahead of a seminar this week so that experts from the superannuation sector, researchers, government and the housing sector could respond.

Associate Professor Julie Lawson from RMIT's Centre for Urban Research said home ownership rates were declining, especially among the young.

“While the number of tenants is growing, the number of those renting social housing has almost halved - despite burgeoning waiting lists - from 5.8 per cent of households in 1998 to 3.9 per cent in 2010,” she said.

“Strategic investment is needed to increase the quantity, quality and security of affordable rental housing accessible to low and middle income households.

“Private investment will only flow when the risk weighted returns are right for investment funds.

“A specialist intermediary such as the AHFC [the report’s recommended ‘Affordable Housing Finance Corporation’] combined with a guarantee helps achieve this balance.”

The AHFC would pool the aggregated investment demands of the growing and professional community housing sector (currently managing 45,000 dwellings), to provide a suitable scale of and pipeline demand for bond issues attractive to Australia's rapidly expanding managed funds sector.

The proposal draws on well-established and successful international models from the UK and Switzerland that have been adapted to meet Australian needs and market conditions.

The UK's Housing Finance Corporation and the Swiss Bond Issuing Co-operative both participated in the study.

"The guarantee makes more efficient use of limited public resources, by simply exploiting government credit worthiness to full effect and strategically backing bonds investing in recently completed, tenanted developments managed by the not-for-profit housing sector," Dr Lawson said.

John Hopper, Head of AustralianSuper's Fixed Income Portfolio, said: “If the government guarantee, proposed by AHURI, can be structured in the right way and the return was attractive relative to comparable investments, these types of housing bonds could be part of our portfolio.”

Carol Croce, CEO of Community Housing Federation of Australia said: "Many community housing providers are on a growth trajectory in response to high demand for affordable housing.