Australia's housing market has become one of the most expensive in the world relative to incomes. Understanding why requires looking at both the supply side and the demand side of the equation.
The Supply Constraint
Australia builds fewer dwellings per capita than comparable nations. Zoning restrictions, lengthy approval processes, and infrastructure costs have combined to create a chronic undersupply — particularly in the inner and middle rings of our major cities.
The Demand Drivers
Population growth through immigration has added sustained pressure to housing demand. When this interacts with constrained supply, the result is the price trajectory we have seen: near-continuous appreciation in Sydney and Melbourne over the past three decades.
Policy Options
Economists broadly agree on the solutions. Upzoning high-demand corridors, streamlining development approvals, and reforming stamp duty in favour of a broad-based land tax are consistently recommended by the Productivity Commission.
