Australia must increase housing supply to improve affordability

Allowing Aussies to access their super early to buy a first home was also recently floated (notably by Liberal MP Tim Wilson). Again, this would not solve the problem. It would have the same effect as the federal government’s subsidies of bidding up house prices. Ultimately, these policy proposals should be secondary to fixing the supply side of the market. This is what will make the biggest difference to improving affordability in the long run.

All levels of government have a responsibility.

The federal government should resist expanding schemes that serve only to inflate the demand for housing. Meanwhile, state and local governments should aggressively pursue supply side reform by cutting planning red tape. It has also been recommended that the federal government provide incentive payments to support this process (the major think tanks seem to be in agreement on this one). Committing to this process would make housing supply more responsive to demand, bringing the dream of home ownership back into arm's reach for aspiring home buyers.

For now, at least, the government took the easy route, which was crystal clear in their federal budget largesse – pursuing uninspired pre-election policies aimed at winning votes.

The problem is, by improving housing access for some prospective buyers in the short-term, housing becomes more expensive for everyone else in the long term. This was a clear case of a short-sighted government picking winners and losers, making the problem worse (despite some of their rhetoric).

Prices will continue to rise as demand outstrips supply, kicking the can down the road to the next election cycle. If long-term reform is not tackled head-on, the situation will only get worse for aspiring home buyers.

So much for the land of the ‘fair go’.