Restricting the number of investors in the housing market is possible if there is an increase in interest rates on investment loans. In 2017, this kind of regulation reduced house prices in Australia. This paper proposes that reintroducing this policy could, as interest rates fall, help make housing more affordable for owner-occupiers.

The government could direct the Australian Prudential Regulation Authority (APRA) to force lenders to limit the number of loans they offer to domestic property investors. It's a lever which the government has pulled before – and it worked. Restricting the number of investors in the market would mean that Reserve Bank interest-rate cuts do not lead to increased demand from investors, which has the adverse effect of pushing up house prices. 

This type of policy, known as 'macroprudential regulation', would help make housing in Australia more affordable. This paper recommends that the Commonwealth add housing affordability to the objectives of macroprudential policies.