Land releases are a bad idea. You don't want an LA style sprawl as has been promoted recently (http://www.ozpolitic.com/forum/YaBB.pl?num=1181893024). It is market forces at work. There is plenty of cheap housing available, just not in the cities.

Better public transport is however a good idea. As is higher density housing close to the CBD.

Some recent media articles about the first home buyers grant: http://www.ozpolitic.com/forum/YaBB.pl?num=1181785305

If you want house prices to come down, get rid of the first home owners grant. The states were also supposed to get rid of a lot of the taxes when the GST was introduced. They didn't.

Bazz makes a good point.Not only did choice go out the window,our birth rate went into the negative.With credit so freely available,this has come back to bite the Coalition on the backside.Just a small increase in interest rates now puts people in trouble.

Arjay would like to steer this back to "the coalition", however if Labor wins the next federal election (highly unlikely) I suspect there will still be two-income families; still be relatively low interest rates, and still be 8 Labor state govts running land release schemes and service provision to these land releases. So could we stick to solving "the problem" please, instead of playing blame games?

House prices rise in tandem with rising DISPOSABLE income. This happens as the average wage rises faster than general costs AND across wage levels (ie the household on $200,000 pa will usually be buying a house costing much more than the household on $50,000 etc etc). But, what really pushes the various households to buy a house is the concept that a house is a "nest egg", a commodity which will continue to rise in price and, especially...be tax-free at the end.

Now, it's easy to see what would happen if the capital gain from a house were taxed at anything from 30% to 47%, after you'd spent 25 years paying 10% (on average) interest plus the rates, the insurance,the repairs, the endless "improvements". Suddenly, the house would only be attractive as a "home" and suddenly too the rampant speculative aspect would fade from view.

The major factor would then become "Cost of buying vs Cost of renting". At the moment, for example a $400,000 house costs me about $300 pw to rent. To buy this house would cost about $750 per week (ie borrowing at about 8%, paying all the ongoing costs, foregoing the earnings from my initial deposit etc , not to mention initial expenses like stamp duty, mortgage insurance et al). Who in their right mind would BUY? Except that you had a dream of one day getting it all back when you sold AND not pay tax! Cheers, and hope this helps

PS. Needless to say, the people who already own/are buying property to occupy will not be voting for any politician who would actually take the tax-free status of property AWAY.

House prices do rise with disposable income, I agree.

The real problem is that the disposable income of two incomes is
higher than one income and requires two incomes to repay the loan.

The price of houses will always match the available funds no matter
what the surrounding income, interest, rental costs etc etc are set at.

Rent will never be at great variation from the cost of buying a house
because the renter/buyer will always adapt to suit the absolute values.
The lending organisations set their repayments around 30% of income.
They did this 50 years ago and they still do the same.

It does not matter what anyone does the cost of housing will be
30% of one income or two incomes. The price of houses must match
that and there is no room for it to be otherwise.

Therefore all discussion and manipulation by governments will do no
more than make marginal changes.

What has happened to all the comedians? The one about two incomes is pretty funny. But sadly absent are the potential incontinence to be suffered by reading the low interest rate or mad speculator theories, not to mention the equally side splitting "just move further away" solution. The idea of wanton speculation into the production of a commodity leading to a supply crisis is deliciously hilarious. The idea of there being no end of affordable, quality housing "just a bit further away" is an equal hoot, especially when I noted only one termite infested fibro dump in the claimed price range for one area, with all other properties two to three times the price.

But with the subsidence of my good humour, I must again be the little child and interrupt this blind men and the elephant pantomime. The reason for the housing affordability crisis is simple: The increasing population is incurring huge infrastructure costs on the community. The high cost of building reflects the inclusion of some of the infrastructure costs. Were the total infrastructure costs included, the cost of building a new home would be much higher.

The simple solution to the affordability crisis is to stabilise Australia's population, as such a measure almost eliminates the problem of providing infrastructure, resulting in huge cost savings, thus negating the need to heavily tax new construction.

Fester ,we have the lowest pop density of any country in the entire planet.So that shoots down your theory.Pop is not the problem,it is a matter of bloated Govt bureaucracies,too much tax ,regulation and a globalised mentality that sends real jobs to third world coutries thus giving more power to multi-nationals.We are the only western country that has a no tarrif policy on primary industries.We for some reason are the experimental,sacrifical lambs.There is no method in the madness from our point of view.

If our primary industries had the same protection of Europe and the
US,our regional areas would be more self sustaining and we would not be facing the present intensity of a housing crisis.

If the existing status quo was truely a level playing field,I would support it,currently it just undermines any reason to be patriotic.