The $3.3 trillion superannuation industry and institutional investors are being encouraged to direct more money into residential housing, with funding for the push included in the Federal Budget.

More resources will be allocated through Treasury and financial regulators to help resolve regulatory barriers for super funds and other institutional investors to invest more in housing.

Super funds and other institutional investors already invest billions of dollars in commercial real estate but have relatively little exposure to the residential housing sector.

In September the Federal Government announced it will make up to $575 million from the National Housing Infrastructure Facility (NHIF) available for investment in affordable housing, as part of a plan to lure the super sector into social housing investment.

The NHIF is a $1 billion facility that offers loans, grants and equity finance for “housing-enabling infrastructure” such as utilities and roads.

The superfund sector says it needs a Federal Government “top-up” to invest in affordable housing as it delivers lower rental yields.