The Reserve Bank (RBA) recognizes the importance of housing to the people of Australia. Shelter is a fundamental human need. Being able to access appropriate housing, whether to own or rent, is a central concern of government policy, and it has been the subject of several inquiries over the years; the Bank has made submissions to these previous inquiries, which form the context for this one. Well-functioning housing markets that are accessible to all people enhance well-being, support labor mobility, and promote an efficient allocation of resources across economies.

Government policies, including tax and regulatory settings, affect both the demand for and supply of housing and in turn housing affordability. These policies can produce incentives that increase demand, transaction costs that can deter housing turnover, or regulations that affect the flexibility of housing supply. Access to credit also plays a role, affecting both households’ ability to borrow to buy housing and developers’ ability to expand the supply of housing in response to changes in demand. It is necessary to understand the full range of factors affecting both demand and supply to design effective policy interventions.