In January, an analysis by CoreLogic put some hard facts on the line.

To purchase a median-priced dwelling, the average household in Sydney and Melbourne now has to outlay (including borrowings) around 8.4 and 7.1 times their annual income respectively. Finding houses for less than $400,000 was virtually impossible across Sydney, Canberra and Darwin and was becoming increasingly difficult in Melbourne (where only seven per cent of suburbs now have a median house value of less than $400,000), CoreLogic reported.

As housing becomes more expensive, affordability has become increasingly prominent in political debate. That raises questions about whether governments (federal, state and local) are either helping or hindering the delivery of reasonably priced housing.

According to John Brockhoff, Principle Policy Officer of the New South Wales division of the Planning Institute of Australia, there are a number of ways in which policy makers have done both.

On the positive side, Brockhoff said policies such as SEPP 65 in New South Wales were helping to promote good apartment design outcomes and were thus facilitating greater acceptance of higher density living. Planning systems, too, were getting better at accommodating population growth and greater housing diversity through measures such as new dwelling creation targets and priority development precincts and medium density housing codes. Greater allowance of secondary dwellings has helped to unlock some new supply. Important policies around aged housing and universal design had helped.

Appreciation of the importance of growth being accompanied by better transport, amenity and public spaces has improved – albeit with expectations for improvement in living conditions not yet being fully met. The National Rental Affordability Scheme had proven useful in terms of delivering affordable rental dwellings.

On the negative side, Brockhoff says we have not fully understood the dimensions of the aforementioned social contract around community expectations for improvements to accompany the impacts of growth and thus have not dealt entirely with not-in-my-backyard syndrome. Fed largely by tax concessions, he says a growing phenomenon of housing being seen as a financial asset has driven up investor demand and thus dwelling prices. Costs associated with stamp duty as well, were serving as a barrier to people relocating to more suitable dwelling types and thus hindering our ability to derive maximum efficiency in use of current housing stock.

In terms of processes, Brockhoff says improving trust and acceptance of complying development is important. Nevertheless, he said a bias in this area toward single detached dwellings created a perverse incentive whereby it was easier from an approval perspective to create these types of dwellings as opposed to the low rise multi-residential dwelling types which are needed to help alleviate supply pressures. Whilst medium density housing design codes for complying development were a positive step, Brockhoff says these need to be accompanied by greater community trust in the complying development process.

That, Brockhoff said, highlighted an underlying issue in terms of the need to build confidence in how we go about delivering greater density. On too many occasions, he says areas around Sydney have experienced intense growth and densification without a holistic discussion about what is needed in these areas from a community perspective.

Going forward, Brockhoff would like to see better infrastructure, planning and funding as well as greater trust in complying development and the adoption of accessible and adaptable housing design. He would also like a number of things happen in terms of the provision of affordable housing for very low to moderate income earners. Along with planning mechanisms such as affordable housing targets and inclusionary zoning, this includes measures such as the creation of financial instruments underwritten by government in order to bolster the capacity of community housing providers and enable them to gain critical mass and have access to cheaper finance. Even with this, he stresses the ongoing need for support to renters along the lines of the National Rental Affordability Scheme (which is being replaced with new agreements and different funding).

Investment was also needed in urban infrastructure – especially mass transit to connect housing, jobs and services. Housing affordability considerations, Brockhoff says, consist not just of the price of the house itself but also costs associated with living within a given area and commuting to employment. This includes hidden costs associated with lost earnings in cases whereby a lack of proximity to employment centres results in one partner within a family being forced to work locally and accept local-economy level earnings as opposed to the global economy level earnings associated with employment within major metropolitan CBDs.

Finally, caps on amounts which municipal councils can raise in terms of rates and developer contributions means that councils are hamstrung in their ability to provide local infrastructure. Partly because of that, there have been instances in which voluntary planning agreements through which developers agree to provide community space or facilities typically in response to for greater floor space allowance have delivered outcomes have not been consistent or transparent. A more normalised approach toward local infrastructure funding, Brockhoff said, would help to alleviate pressure upon voluntary planning agreements and would thus help to alleviate concerns in this area.

All of this, Brockhoff said, relied upon the notion of an implied contract with the community.

“All of these things rely on the notion that population is growing, people need housing and that there is a huge diversity of needs and income types – but there is a valid expectation that there will not be a degradation of living conditions alongside growth,” Brockhoff said.

“We need to accept that growth is occurring and we need to do it well. That’s a discussion between state, federal and local government and the community and there needs to be a growth in trust.”

“The best way to grow that trust is firstly obviously having consistent policy messages but secondly to acknowledge that where this growth and densification is happening there needs to be a close agreement on what is needed in terms of community infrastructure, transport infrastructure and how we fund it.”

“We can’t assume that different growing and changing communities want or need the same amenities. Some value sporting fields and others better public spaces and entertainment. It can’t be standardised. It’s got to be ‘in this area, what does the particular community want and what will they need in the future?’”

Princess Ventura, a property economist at urban planning and economics consultancy Urbis, says policy at all levels has failed to address underlying issues associated with a lack of supply. Whilst demand side measures such as first home owner grants are relatively straightforward to implement, she says reforms on the supply side are more challenging.

First, there is infrastructure. Whilst Melbourne’s more extensive road and rail assets have enabled the delivery of housing across a more widespread area, Ventura says a lack of infrastructure investment within Sydney until recently underpinned pressure upon inner urban markets in which people have needed to live in order to maintain good access to employment.

Also in New South Wales, Ventura said planning systems are cumbersome and non-transparent, with developers often facing considerable levels of uncertainty with regard to issues such as rezoning approvals, approvals for developments of greater heights than is specified within the plan, or what technical reports will be required in certain areas. In Singapore, for example, land release plans are known 10 to 20 years in advance, and there are processes in terms of bidding for rights to develop land.

By contrast, processes in NSW with regard to bids to redevelop the White Bay Power Station site, she said, were unpredictable from the beginning insofar as there was no clear time frame with regard to decisions being made. Having gone through to a short-list and then a preferred partnership involving Google and Lend Lease, the government made a last-minute call to take charge of the $2 billion project to develop the precinct itself. All this uncertainty, Ventura maintains, adds greater risk for developers and increases the final cost associated with delivering the outcome.

At a local level, Ventura said councils have little incentive to facilitate greater housing supply within their municipalities. Indeed, she says, the degree of power which is concentrated in the hands of local government at the municipal level over new development is incongruous with the need to cater for population growth on a metropolitan wide basis.

Going forward, Ventura would like to see a metropolitan-wide approach toward new housing delivery. An example to look at would be London, she said, where funding received by local government is tied to the achievement of housing creation targets.

To reduce the cost associated with new housing delivery along with that associated with people relocating into dwellings which best suit their needs, transaction related revenue measures such as stamp duty could be replaced with a broader land tax, she says. Ventura would also like to see concessions which encourage speculative investment and drive up house values such as negative gearing and capital gains tax wound down as well as higher rates of capital gains tax applied to foreign buyers.

Finally, Ventura says places like New South Wales could look at shared equity schemes such as the Keystart scheme in Western Australia, through which the government co-owns up to 40 per cent of properties purchased by low and moderate income earners. Such schemes, she said, offer promising pathways to home ownership with less onerous deposit requirements and mortgage sizes for low to moderate income owners.

Housing affordability is a challenge throughout Australia.

Whether or not governments are helping or hindering remains an interesting question.