The Planning Roots of the Australian Housing Affordability Crisis

Missing the Point on Australian Housing Affordability

According to the Australian Broadcasting Corporation, a new report by National Economics blames infrastructure underinvestment for the housing affordability crisis in that nation. Over the past two decades, house prices have doubled or more relative to household incomes across the nation.

National Economics misses the principal point, which is that house prices have increased because government planning regimes have rationed the supply of land for development. This is demonstrated by the fact that virtually all of the increase in new house prices has been in land prices and that land prices have exploded without respect to relative demand. For example, land prices have risen as much in Adelaide, with its moribund demand as in Brisbane and Perth with the highest demand for new housing in the nation.

Urban Taskforce Australia spokesman Aaron Gadiel summarized the reality well, noting that "Every credible independent report on the housing shortfall has found that the planning system and the restrictions imposed by local councils are front and centre to blame for the current situation we find ourselves in."

The Demographia International Housing Affordability Survey has documented the extent to which overly prescriptive land use regulation has driven up the price of housing. House price increases of the Australian magnitude have never occured in the nations covered by the Survey, except where governments have placed severe limits on the supply of land (which raises its price).

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