• In August 2003, the Treasurer asked the Productivity Commission to conduct a public inquiry into the affordability of housing for first home buyers.

• The backdrop: – since 1996, house prices had more than doubled; 80% up in real terms (half of which in previous 3 years) – longest and cumulatively largest price surge on record – median prices went from 6 to 9 times average annual earnings – halving in share of new housing loan approvals going to first home buyers (14 to 7%) – evidence of rising housing ‘stress’ for low income people (renters)

• The debate that ensued from these events was muddled and politicised – welcoming of (apparent) gains in wealth to existing home owners; disapproval of the (consequent) difficulty for those seeking to own a home. – opposing views on causes:

- a demand-induced bubble (seen as likely to burst, at some risk to economic growth)

- a consequence of (State) government supply-side policies: restricted supply of land, excessive taxes/charges, and burdensome regulatory requirements. 

- In short, a suitable task for the Productivity Commission! (Independence, open and consultative processes, and recommendations based on a community-wide perspective)