It is no surprise that former Prime Minister John Howard labelled housing affordability as a BBQ stopper.

The dream of home ownership matters a great deal to Australians, and it remains a hot topic today.

As such, it is deeply disappointing that the housing affordability debate has been hijacked by side issues such as the impact of foreign buyers, lax foreign investment rules and negative gearing as a cause for the house price increase. Instead the debate should be properly focussed on the real problem, which is lack of supply or more correctly, the lack of land supply.

Seasoned house builders, who have seen many housing cycles come and go, know that house prices increase more rapidly during residential upturn. Builders also know that a house price boom does not last forever and that house prices also subside.

The latest upturn is highlighting the fact that, as with previous upturns, housing supply is unable to keep up with housing demand.

Master Builders research shows Australia’s population growth, continued high levels of immigration combined with demographic changes are major drivers of increasing demand. These findings are backed up by similar findings by the Reserve Bank of Australia, the Federal Treasury and various Parliamentary inquiries.

The undersupply of housing has led to, as in all cycles, a jump in house prices, but the populist approach by the ‘commentariat’ is not helping to get our politicians focused on the real problem.

A complex array of structural impediments are standing in the way of supply being able to meet demand. These structural barriers are well known and include the full gamut of development approval processes for residential zoning, higher density developments, unreasonable developer charges, the third party appeals process and so on.

There is no simple one-size-fits-all solution to this issue. The supply side problems that lead to deterioration in housing affordability are different between states and yerritories. Accordingly, Industry has called for the reintroduction of National Competition Payments (NCP) as one of the core reforms to free-up housing supply.

The NCP proposal would have the federal government pay state and territory governments for the permanent removal of the structural impediments to housing supply. That will lead to significant improvements to housing affordability. Tinkering with foreign investment rules and negative gearing is, at best, tinkering at the edges and simply misses the point.

Master Builders Australia has developed a multi-point, package approach to improve the housing affordability challenge in Australia. In addition to NCP payments, the plan calls for:

  • A commitment by federal, state and local governments to implement a coordinated and proactive housing affordability agenda
  • Streamlined and simplified development approvals processes
  • Local councils to develop practical and achievable residential land release plans over a ten year ahead rolling time horizon
  • A rigorous and enforceable building code and regulatory system to ensure the development and continuation of an efficient and competitive building industry
  • Assurances that state and territory governments will honour their commitment to abolish stamp duties on business conveyances of real property
  • Annual publication of a national stock-taking of developer/infrastructure charges levied by all local councils on both greenfield and brownfield developments

Importantly, housing supply reform proposals are designed to ensure that the intergenerational home ownership gap does not widen for first home buyers. Home ownership is an essential social and economic pillar that must be protected. Making sure that households have access to appropriate and affordable housing must remain a policy priority for all politicians, both at the federal and state levels.

Access to appropriate and affordable housing should also be a priority for public and social housing where there is an equal urgency for fundamental reforms about how housing is delivered in these sectors.

All politicians and commentators to bring the focus of the debate back to the main game, which is housing affordability and how best to increase the housing supply.