I live in Western Australia and we have a similar problem to Victoria. I agree with Ross, the politicians bleat about the urban sprawl and the Greens bleat about the loss of countryside to housing, in the meantime housing prices rise and young people see the affordability of owning a house gradually rising beyond their reach.
State governments should develop this outer urban greenfield land at cost.
During development light rail transport and community facilities should be built.
These developed outer urban housing site should then be offered to first home buyers at cost with the proviso that a certain type of house be built within a specified period.
Engineering companies be encouraged to factory produce steel or pine framed housing on a production line basis. A complete house can be assembled in the factory in this way including costly onsite services and transported to the site dismantled, then re-erected in a very short time on a prepared concrete slab.
This type of housing is usually manufactured and erected by semi-skilled labour thus further reducing the initial cost.
Already these relatively cheap manufactured houses are being constructed in European countries such as Sweden. The houses consist of a number of basic designs depending upon individual choice and affordability, being of a very good standard and finish, are eminently suitable for first home buyers on a limited financial budget.
There is nothing wrong with outer urban housing provided all modern amenities are initially provided together with very importantly cheap efficient light rail public transport.
Usually when these projects are provided by private developers they have to overcome/meet all sorts of costs and obstacles provided by State and Local Governments resulting in added costs to the buyer without any advantage of cheap efficient public transport or community facilities initially provided, hence the criticism against outer urban living by these aforementioned idealists.
One must feel for the young people today who can only look forward to a huge debt burden if they desire to own their own home? Who does'nt?

One thing that must be considered in the 'affordable housing' debate is that real estate is often the biggest investment in a person's life. I recently bought my first home and am in that precarious place where a drop in property values would mean that I have borrowed more than I own. Sadly, to make housing more affordable by simply reducing house prices, we are chipping away at the investments of those who already own houses. Once again, we are robbing the 'rich' (as the federal government now classifies me) to give to the poor.

Are there more innovative solutions out there? Decentralisation always pops up, as noted by Hasbeen. I can buy a house an hour and a bit west of here, in Charters Towers, that is much bigger than my own for about $100,000 less than I have spent. The trouble is, there's not much for me to do there in terms of work. Perhaps making affordable places more liveable would be a start - don't just tell people to 'go bush' - work on the sustainability of rural/regional communities so that they become places to raise a family - and places where the kids just might stay when they grow up. I'm not a planner, and I don't know how this would be achieved, but I am sure there are ways to please the home owners AND the home seekers at the same time.

Sorry Ross but based on the 2011 census, the glory days of the housing sector are over.

The government funded National Housing Supply Council (NHSC) tried to talk up the so-called housing shortage by stating:

“The revised national estimate of the housing shortfall at the end-June 2010 is 200,000 dwellings, 13,000 greater than previously published”

A good try but reporting on the census Bloomberg News revealed:

“Australia has almost 1 million fewer households than assumed in a government forecast of a housing shortage, raising doubts about a supply shortfall cited as the main reason the nation will avoid a US style housing crash”

And

“The nation had 7.8m households, compared with estimates of 8.7 as of June 2010 as used by the NHSC and additionally our nations population grew by 300,000 less than previously estimated.”

So Ross, there are now 300,000 fewer people in Australia than previously thought, roughly equal to one year's immigration levels.

Our entire banking sector is built on a fallacy, the banks, in cahoots with the housing industry and government have built a housing bubble on the false belief that the Australian population was soaring.

Ergo, Australia has a gigantic asset and credit bubble, get ready for the housing and banking bust.

somehow I don’t think NSW and Victoria will need that land they have set aside for release!

Chris I agree Albury-Wodonga is a lovely place, just a damn fool place to try to develop into a major manufacturing hub. Still having spent my later school years in Bathurst & Young, & my flying training at Uranquinty, [Wagga Wagga for most of you], I guess you are wishing for some global warming right now.

Rhrosty I agree with much of your post, except the transport bit. It makes no sense at all to continue bringing office workers into any city day after day. The sensible thing is to take the work to the people. Move all those public servants work sites out to the periphery of the cities, & much of the rest will follow. We might as well make some use of this fool NBN.

This way you don't need new expanded railways or new freeways, & you have much better life styles for all.

Ross Elliot writes:

< In Victoria, the state government has announced the release of an additional 35,000 lots around the Melbourne fringe, to stimulate the supply and choice of new housing and to reduce price pressure from limited supply. >

What this is doing is chasing the tail of the huge and ever-rapidly-increasing demand for housing that is being exerted via our absurdly high immigration rate.

Ross Elliot concedes that supply is a factor in housing affordability. That’s a start. So can he now concede that it is not just supply, but it is the relationship between supply and demand, in which the demand factor is the all-important element?

By far the easiest and most effective single measure to increase housing affordability would be a simple large reduction in immigration.

But of course, we’d then have Ross and his ilk crying foul very loud and long at the downturn in the property market, both in the number of sales and the profit margin in the real estate business!

< What's been proposed in NSW and Victoria is nothing more than a fresh look at stimulating new home construction…. >

YES! Nothing more than that.

It is certainly NOT a holistic approach to the issue. Stimulating home construction would be part of the solution if it was coupled with a much more sensible approach to the demand side of the equation. In the absence of this, it will at best provide only very limited and temporary relief to high house prices.

I don't have enough knowledge to contribute to solutions. I will never understand suburban living though, 'tis soul destroying (I enjoy apartment living in inner city and rural living) but understand others love it and the libertarian in me supports their right to choose.

I think eventually the suburban sprawl model will possibly collapse, as there seem little forethought in the infrastructure to post peak cheap oil. Though if a majority move to scooters in the interim when petrol sits at >$5 equivalent a litre, congestion will minimise. Perhaps an inevitable switch to electric vehicles, albeit that has inherent infrastructure issues as we seem keen to continue baseload models of electricity generation. Of course charging everyones Car at midnight is a good use of offpeak, as the Smelters are closing down. Government seems to never want to build a decent heavy rail spoke with light rail transport infrastructure. Poor utilisation of tax dollars on non-recurrent expenditure vs infrastructure spending seems the culprit there, coupled with the inevitable inherent incompetence of managing complex system with central planning.

As to population, it will only ever expand in Aus, if the climate guys are right, there will be lots of climate immigration we won't be able to control, short of standing at the beach and riddling them "Normandy Invasion" style.

We also seem a stand-out in our "everyone live in the capital city" model (and then everyone leave on the weekend to swamp nearby tourist villages) but I guess that's a function of our highly productive primary resource sector and everyone else living in the city engaged in washing each others dogs, not having a diverse economy.