Housing affordability concerns the ability of singles, couples and families to buy or rent dwellings within reasonable distances to employment and study opportunities, and basic amenities. Those dwellings are first and foremost our homes, the foundation of our lives and our families – a basic need. This has become a prominent issue after several years of double digit price growth in some major property markets, with particular pressure in south-east Australian capital cities and certain coastal regional centres.

This discussion paper endeavours to identify the underlying causes of affordability issues, and to consider some useful policy responses in the current and historical context.

Key findings:

• Australia’s housing affordability problem has developed over several decades and will require a long-term commitment by all levels of government to resolve.
• Destabilising wealth effects and the continuing expansion of household debt are feeding a cycle of property price inflation which looks unsustainable.
• Policy responses that increase the buying power of households (for example, through grants, or reduced taxes) will only increase demand, and therefore prices.
• Ignoring the emerging crisis in assisted housing (affordable, public and community) now risks major future social and productivity costs.
• Simply increasing overall housing stock will not ensure that more assisted housing becomes available. Instead, increasing the supply of assisted housing specifically is required.
• Waitlists for social housing remain intractable and this system no longer serves as a safety net.
• Achieving the necessary growth in assisted supply is beyond the capacity of Australian governments, and private investment is required.