How a shift in public policy could ease the affordability crisis

Industry Super Australia (ISA), a research and advocacy body for industry super funds, recently released a new discussion paper that aims to understand the underlying causes of the housing affordability crisis. The paper also considered some useful policy responses in the “current and historical context”.

“Housing affordability has become a prominent issue after several years of double-digit price growth in certain major property markets,” ISA said in its report. “House price pressures are most acute in south-east Australian capital cities and certain coastal regional centres. The cities which are our economy’s engines of growth are also the places where housing stress is greatest.”

The price surge in these localities is forcing much of the population to live further away from their workplaces, leading to longer commutes. Strained housing affordability is also impacting society’s most vulnerable, with lower and middle income earners finding it increasingly difficult to balance earning a living with family and other obligations.


  • Key workers, such as police officers, teachers, and nurses, have to make long commutes, as they cannot afford to live near the communities they serve.
  • Adult children are staying at home longer, marrying later, and taking longer to save for a home deposit.
  • Many older Aussies are residing in large houses that no longer suit their lifestyles, while a greater number of retirees are renting or paying off a mortgage.
  • More Australians are renting compared to previous decades.

“Australia’s housing affordability problem has developed over several decades and will require a long-term commitment to resolve,” ISA said. “While housing construction activity in 2016 and 2017 has kept pace with population growth, it has not dampened demand generated by years of under-building in certain key localities.”

The problem is exacerbated by the lack of attention being paid to affordable rental housing for low to moderate income households. “In 2009, the National Housing Supply Council reported that the supply of affordable rental dwellings for low income earners had fallen in absolute and relative terms in the decade to 2006, despite a 20 per cent increase in the overall supply of housing. Since then the situation has only worsened.”

To ease the crisis, various levels of government need to cooperate

According to ISA, a pragmatic mixture of housing policies across all levels of government would help smoothen out the imbalances in the major property markets.

“Federal, state and local governments need to find ways to coordinate activity without duplication or political interference,” ISA said.

Other suggestions provided by the research and advocacy body include:

  • Linking federal government planning, and state and local government housing approval processes, to estimates of regional housing supply gaps.
  • Encouraging more work and student visa holders to reside outside housing market hotspots.
  • Redirecting all foreign investment to new residential property.
  • Reforming the land tax in Australia by abolishing stamp duties and replacing them with a mixture of land and betterment taxes.
  • Reorienting the $12bn spent annually in federal tax concessions towards investment allowances for greenfield developments and institutional investment in new assisted housing.