How Governments Can Ensure More Affordable Housing

Government can ensure more sub-market homes on its own land and incentivise the private sector to do so through better policies. Sydney’s housing market is cooling.

Between 2012 and 2017 housing delivery went up from an anaemic 13,000 a year to a super-charged 35,000-plus a year. Of course, those who know about the business of housing development as contrasted with ideologues of rational markets will not be surprised to learn that house prices went up significantly in that period and now stand about two-thirds higher compared with five years ago.

Also of no surprise is that while house prices have come off certainly five per cent and perhaps more – which is what Meriton’s Harry Triguboff says (and he should know) – since the peak in the third quarter of last year,

Sydney’s population growth has not declined. The city’s population is still advancing at just under 100,000 a year – about the same as London but in a city with just over half London’s population.

Housing markets do not reflect a simple relationship between supply and demand, rather better reflect the effective demand for housing in the context of the supply of credit than they do demographic pressures.

Indeed, housing supply tends to go up when prices go up and supply falls when prices go down. My purpose in raising this is not just to make a point – though I always like to make this point.

See more: Stimulating private sector development of affordable housing

Five Ways Local Governments Can Spur Development of Affordable Housing