One possible way of making more houses available in an area like Canberra where the government controls the release of land and makes a large profit on the sale of land is a variation on the shared equity proposals of Malcolm Turnbull.

We leave the price of housing the same but delay the realisation of profits being made by the government on new land releases. The government could defer the profits on new land sales to enable new home owners to get into the market or old home owners to build new homes. It could do this immediately by giving a no interest loan to the value of the profits from new land sale to the first resident of the house on the land.

The loan is repaid when the new owner sells the house or land or in the case of developer the loan would be transferred to the first genuine dweller. The government would still get its profits from the sale of the land - but it would be deferred. People would be able to afford to build new dwellings, and the price of existing residential dwellings would not reduce. It would encourage home ownership, increase the stock of housing, be easy to police and be done "tomorrow".

Thanks Saul, I always enjoy your articles which strip potentially emotive issues back to the facts. And finally a commentator with credibility talking about not driving demand but improving supply. I guess immigration isn't going to slow too soon (unless, paradoxically, the price of housing deters would-be immigrants from coming to Australia), and my understanding of the age pyramid is that new household formation will continue it's slow increase (until Mr Costello's 'one for the nation' generation clicks in anyway).

This may be slightly off topic, but what does concern me is that 'we' are literally betting the house on interest rates and the price volatility of oil. Oil seems to be 'sticking' around the USD60/b but any dark looks by the US or Israel at Iran seem to make it spike, so heaven help us if someone lobs a missle or two (or insults a South American president). Also the supply side seems to be only just meeting demand. I'm not suggesting a potential collapse in property prices unless there is a real 'oil crisis' but I wonder about the increasing sensitivity to any further oil price/interest rate rises for those fully leveraged (and having to drive for half a day to get to work).

I wonder why anyone would think that an improvement in the supply side of housing is going to help to make them mre affordable. It isn't going to happen, for the same reason that the supply of Oil isn't going to increase. That would only drive the price down and be against the interests of those who control all these things - the people with all the real money.

The other factor driving the price of housing higher is wages. Way back when we had single income families a twelve square house was all that we could afford. Now we have two income families with less children and twenty five square houses are the norm. That might come back a bit now that we are looking at installing rain water and grey water tanks with their associated plumbing.

Thank you, Mr. Eslake, for your article.

I often wonder if people in your position ever take into consideration the quality of life we Australians have when planning or evaluating the "economic model". It appears to me that over the last thirty years our quality of life has not changed one bit. In fact it has considerably diminished. We still sit in traffic jams, have replenishable resource infrastructure problems and now our young ones have trouble affording a house unless they are working in a mine or the family has two full time incomes.

There is no point driving the building industry by increasing the population of our country. It is a seriously false economy. We have far exceeded our island carrying capacity unless we use huge amounts of energy to maintain the supply of resources. Why are the pundit's and our Government still driving an increase in the population? It seems only a very few gain from this while the majority of us have to put up with the continuous decline in our levels of amenity.

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When are the economic leaders going to devise an economy which will work without growth while maintaining the exceptional quality of life we have. I know I just spoke a heresy but look around and tell me what you see. You say yourself that prices will only fall if there is unemployment rise or interest rises. Why drive these up by bringing in more people? We need to reduce the load on our replenishable and renewable resources while maintaining our quality of life.

IN twenty years your children will be far worse off than you. Why? Because the economic system is seriously reducing the level of choice we had thirty years ago. Blind Freddy can see the growth economy works but for how long. If you look closely at our country you can see the cracks around the edges. Withdrawal of services in outlying areas, resource depletion, racial and civil unrest caused by large NUMBERS of people from foreign cultures, the emasculation of the public service and the serious decline in training of our youth and the deporporate expenditure on science. Working two jobs and putting your children in childcare every day just to buy a house! Working to WP A's set up by $5K per day lawyers and trying to bargain your wage on your own when you are an electrician! Working overtime without penalty rates our forefathers fought for. This is what I mean by erosion of our quality of life. Not being able to catch a fish with your kids because they are ALL sold to foreign countries!

We can debate this issue of "choice" and "amenity" here or elsewhere but the issue remains the same, if we keep travelling down this path the country will look like Egypt or Iran in less than 100 years, a strip of grass, a few goats and millions of aimless hungry people with nothing to do but fight amongst themselves and not another living thing that is not a food item or directly related to human sustenance.

Get your thinking cap on Mr. Eslake, we have work to do!

Guy V: You make some commonly expressed points, many of which I agree with partially, if not wholly. However, what proposals would you have for the future of this country? I just don't see many people in, or out of, politics coming up with many good ideas right now.