Richard Yetsenga, chief economist at ANZ, challenged the notion that increasing housing supply is the silver bullet for Australia’s affordability issues, arguing that a market-based supply response alone is insufficient.
“Much of the discussion around Australia’s worsening housing affordability challenges offers a market-based supply response as the ideal solution,” Yetsenga said in a recent analysis.
“But responding to these challenges with new supply, in the absence of pushing just as hard on other policies, is unlikely to materially improve affordability, even in the medium term.”
Economic and market dynamics complicate new builds
The complexities of the housing market, including diseconomies of scale and speculative behaviours, contribute to the difficulty in addressing affordability through new construction alone.
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