Very amusing, Foleo. That's a great number of vacant properties to pay rates on and maintain. But there are real examples to learn from, rural population declines, for example. There are also real examples of stable populations.What is happening now is a result of a big increase in demand, primarily but not solely from increased permanent and temporary immigration. Supply side factors have not been sufficiently upgraded, so the result is not surprising.

There are also complaints of a lag in infrastructure provision. This is also unsurprising as coping with an increasing population imposes substantial costs on the existing population. Such is the case in South East Queensland, where the population looks like wearing a huge infrastructure debt. Without the population growth, the debt at least would be non-existent.

I see more tree changes not less, to a lessor degree sea changes are unlikely to suffer a drop soon.
From Hexham north almost to the border a home mostly just as good as those high priced ones in Sydney can be bought for less than$200.000.
Increasing pressure in big city's offer a cheap home and cash to spend after paying that loan out.
In some cases homes 30 km from the sea, last sold for $185.000 only 3 years ago have changed hands again at a loss of $19.000.
But while heat is unlikely to fire up these prices a great deal that $200.000 is going to return and tree changes that share the coastal dream are unlikely to suffer.

"One definition of an economist is somebody who sees something happen in practice and wonders if it will work in theory." - Ronald Reagan

It is also typical of economists that they think they know what drives consumers and therefore see no need to consult with them.

Much of the investment property available to renters is provided by mums and dads on moderate to low incomes who want to improve themselves and provide for their futures. They are distrustful of other avenues for investment. From what one sees in the Press, they are right to be cautious of any investment they cannot see and control. They are also right to be concerned about investments that show poor returns through high management fees and trailing commissions. Then there is the risk of continual interference by government with superannuation being both a milch cow and a common target for tweaking.

Arguably, when investing in property these investors are taking a high risk with rental returns < 3% gross on investment, increasing overheads and the certainty of interest rate hikes post-election. In many cases it is the case that owners are subsidising the lifestyle of their tenants in the hope of future capital gain (from which must be deducted the costs of selling and capital gains tax). Any wonder that many economists argue that it is a better deal to rent than buy and put the residue into other forms of investment.

Frankly I fail to see any advantage in putting the rental industry under any more strain as recommended by the author, so a few more well-heeled DINKS can afford to buy into the inner city. Besides, one could also argue that it is the gentrification of formerly cheap rental inner city 'burbs by young professionals that has seen an escalation in prices. Of course if capital gains tax was extended to cover the principal place of residence this market could be reduced.

But I think the author is more concerned about older people realising the value of their properties and not the twenty-, thirty- or forty somethings. Intergenerational jealousy, maybe?

The author's and some of the posters' premise is that you can make housing more affordable by simply making it less attractive to purchasers through harsher capital gains taxes, winding back negative gearing, higher interest rates, and more land tax is pure economic folly.

All these things serve to reduce demand for housing, but as night follows day, they will also serve to reduce supply. If you drive away those prepared to pay for something, then the incentive for those prepared to supply it will also decline accoringly. That's the heart of why capitalism works, frustrating as it is for those of us unable to match the market price (me included).

No the only way in which we can increase housing affordability is the same as the way the common man came to acquire most of his modern day material wealth (at least in Western industrialised countries). Cheaper production.

Much could be done to make production of housing cheaper. Most of the high cost of housing stems from the very limited amount of land which exists in proximity to infrastructure. Land itself is not much of a limiting factor in Australia, contrary to one poster's commments. If, as others have said, more tax dollars/ or private incentives were directed toward building new infrastructure outside of our main cities, the supply of viable housing (by that I mean houses in proximity to jobs and services) on cheaper land could be greatly increased. This is cheaper housing production and would result in more affordable housing.

Everything else is just voodoo economics and wishful thinking.

Very true, Kalin1. Housing could be built very cheaply. Shipping containers are an excellent example of one means to this end, and often get mentioned. Relaxing subdivision/multidwelling restrictions in the town planning acts would rapidly bring down housing costs, especially if you get the shipping containers substantially fitted out in China or India.

But this raises two points:

(1) Why have governments failed to take action to avert the affordability crisis when solutions are so readily at hand?

(2) What is the average infrastructure cost to provide for each additional resident?

Water, sewage, electricity, gas, roads, schools, hospitals etc dont magically appear. They must be paid for. So if the true cost for each additional resident is not part of the housing cost , then the cost is subsidised by existing residents.

I would propose as a solution to housing affordability that migrants to Australia pay an infrastructure tax to offset the cost incurred on the community for providing for additional residents. I believe that this would be fairer than slugging new home builders and the existing population as currently happens.

Good luck Philip.

Watch the Property and realtor barons and their stooges circle their wagons the moment anyone tries to do anything with their modern sacred cow, negative gearing.

You will, if you can't already, see the enormous somewhat hidden leverage at the highest offices in our land that the Property industry and its boosters have. They will vilify and crucify you as to them, the end justifies the means and they don't give a stuff about their impact on the community, its all the bottom line.