A simpler explanation is that the reason that property has become so unaffordable in Australia is that we are one of the last western nations with a rapidly growing population. If you stopped population growth and abolished negative gearing you would see prices fall rapidly and the housing crisis would be solved. Now that world energy supplies are falling total real economic activity is falling in line with that. All those extra dollars that are being borrowed (in Australia) or printed (in the USA, UK etc.) need to find a "safe" home - they are pushing up nominal values in stock markets and property prices here from investment in what looks like a property market still giving returns. But it is really only inflation since there is little added real physical value/activity going on - just added price. Once the Australian property market turns south it will crash big-time. That is why the government is desperate to keep record population growth going since it keeps its developer mates (election campaign donors) happy and our main remaining manufacturing activity (house building) in employment. But at what future cost to our children?

michael in adelaide well done. Nobody in the op-eds or so-called column writers would dare to touch the truth because there are so many rich and powerful players. To start with, the papers make millions through in-print property advertising and supplements, as well as through property websites such as D0main dot com and real estate dot com (fairfax and news sites).

Extreme unaffordability will also undermine work incentives if it hasn't done so already (which may be why immigration is so high). What I mean in this is that I see people opting out of work altogether if they realise that they will never have any hope of owning their own home.....traditionally people found they once could work and own a home this is now something many workers will never realise. Why would a person work if they can never get ahead financially and achieve work-life balance as well as dignity and comfort both for now and in their elder years? Immigration keeps the labor supply in overflow so that labor costs are kept down, half of the greens supporters and boosters also are people who have a financial interest in high immigration and growth, the environment is a token ruse to keep our eyes off the ball as far as they're concerned.

michael_in_adelaide.... well said.
It is the only answer to the housing problem and of course also to the water, food, transport, oil and electricity problems as well.

I agree with the others. Michael is right on the ball with his comments about our politiicans' maniacal drive for a bigger population. Big business supported by big government to the detriment of Australia.

Just so know all know where this guy is coming from the "Georgist movement" promotes the idea that the root of all evil is the way land is parceled out. Their answer to this problem (and hence the creation of utopia) is to replace all existing taxes with a single land tax. Ie you are taxed based on the price of the land (only - not buildings) you own. So for example, an Australian Internet bank that put it operations overseas would not be taxed.

http://www.stampmania-australia.com.au/~johnm/wallst.htm

This article just re-casts that mantra in terms of housing prices.

"international surveys leave little doubt that housing in Australia is unaffordable."
Well if housing is unaffordable how come houses(and land) are being bought? The home buyers and the banks who lend them the money are complete dills?
Yes in the capital cities and provincial towns, the value of the land swamps the value of the house. In the bush the reverse is the case. Why? Because the supply of housing land in our cities has lagged well behind the demand for land, a demand fuelled by rising incomes, double household incomes and increases in population. In the bush the supply of housing and land for housing is ample to meet any demands, hence the relatively low prices.
We will see the swing in the inner city to high density units and town houses continue with the percentage of people living in units and town houses, as opposed to houses, increasing over time.