The world’s most popular cities have a serious affordability problem. People of normal means have no hope of ever buying a home in places like Sydney and Melbourne. According to the Australian Bureau of Statistics, the average house price in Australia is now $656,800. New South Wales’ average is $865,000, and Victoria is next at $690,000.

Investor activity in Sydney and Melbourne is driving price growth, according to Ben Phillips, an associate professor of economics and public policy at the Australian National University. Investors currently enjoy low interest rates and incentives such as negative gearing and tax discounts on capital gains. At the same time, wage…