Will building more homes fix housing affordability in Australia?
Supply is the only durable fix — it's the side of the equation that's been missing — but it works slowly and it's running behind. The national target of 1.2 million homes is well off pace, and homes take years to approve and build, so even a strong response eases prices and rents gradually rather than overnight.
There's also a catch: tax and migration policy can widen the gap faster than building narrows it. So 'just build more' is directionally right and necessary, but on the fundamentals it's a multi-year lever, not a switch. The realistic base case is continued under-delivery keeping the market tight.
What actually drives housing affordability?
Four things, roughly in order: interest rates (how much a household can borrow), incomes, the cost of building, and the balance of supply against population growth. Tax tweaks and first-home-buyer schemes move demand at the margin. Our model is built on exactly these fundamentals, which is why we can say which policies move the needle and which are second-order.