Australia’s Housing Crisis Isn’t About Investors. It’s About Supply.

Every election cycle we hear the same debate.

Negative gearing. Capital gains tax. Property investors. First-home buyers.

Politicians argue over who should own Australia’s homes, while quietly ignoring the far bigger question.

Who’s actually going to build them?

That’s the conversation we should be having.

As someone who has spent decades helping Australians finance property, I’ve watched governments of every persuasion promise to make housing more affordable. Yet today we’re facing one of the biggest housing shortages in our history.

That should tell us something.

The problem isn’t simply demand.

It’s supply.

We haven’t built enough homes for years

Australia has been underbuilding housing for well over a decade.

Population growth has consistently outpaced new housing delivery, and every year the gap widens. The National Housing Supply and Affordability Council has repeatedly warned that dwelling approvals and commencements remain well below what’s needed to meet future demand. Construction costs remain elevated, labour shortages persist, and approval delays continue to slow projects before a shovel even hits the ground. 

The result?

Too many people chasing too few homes.

That’s Economics 101.

Yet somehow the national conversation continues to focus on who owns the houses rather than why there aren’t enough of them.

Investors aren’t the enemy

Investors have become an easy political target.

It’s a message that resonates because housing affordability is a genuine issue, particularly for younger Australians trying to enter the market.

But here’s the reality.

Private investors provide the overwhelming majority of Australia’s rental housing.

If fewer investors buy rental properties, fewer rental homes become available.

That doesn’t eliminate demand.

It simply reduces supply.

We’ve already begun seeing investor confidence weaken following recent Federal Budget tax changes. At the same time, building approvals have continued to soften, industry confidence has fallen sharply, and developers are warning that future projects are becoming harder to stack up financially.

That’s not good news for renters.

Nor is it good news for first-home buyers.

You can’t solve a shortage by discouraging investment

Imagine Australia had a shortage of supermarkets.

Would we fix the problem by making it harder to build supermarkets?

Of course not.

Yet that’s effectively what happens when policy reduces the incentive for private capital to fund housing.

Governments simply don’t have the balance sheet to build every home Australia needs.

The private sector always has—and always will—play a critical role.

Developers, builders, lenders and investors all contribute to increasing housing stock.

Without them, the numbers simply don’t add up.

The real bottlenecks are obvious

If we genuinely want more affordable housing, we need to tackle the issues that actually prevent homes from being built.

That means:

• Faster planning approvals.
• More infrastructure to unlock new land.
• Greater certainty for developers.
• More skilled construction workers.
• Lower regulatory costs.
• Encouraging investment into new housing rather than creating uncertainty.

These aren’t headline-grabbing policies.

But they’re the ones that actually increase supply.

Even Treasury has acknowledged that current reforms are intended to redirect investment toward new housing supply rather than established dwellings, highlighting that increasing construction remains central to improving affordability over time.

The market is already responding

We’re now seeing what happens when confidence disappears.

Property markets have cooled.

Sales volumes have fallen.

Investors are sitting on the sidelines.

Developers are reassessing projects.

Building approvals continue to weaken.

The Property Council recently reported its lowest industry confidence since the pandemic, while approvals remain well short of the levels required to meet Australia’s housing targets. 

Ironically, reducing investment today risks creating an even larger housing shortage tomorrow.

That’s because housing supply takes years—not months—to respond.

Housing shouldn’t be a political football

Everyone wants housing to become more affordable.

I certainly do.

I want my children—and one day my grandchildren—to have the same opportunities previous generations enjoyed.

But affordability doesn’t improve by reducing confidence.

It improves when we increase supply.

• More homes.
• More choice.
• More competition.
• Lower pressure on prices.
• Lower pressure on rents.

It’s not an ideological argument.

It’s an economic one.

Let’s start talking about the real solution

Australia doesn’t have an investor problem.

It has a housing supply problem.

Until governments of every level make it faster, cheaper and easier to build homes, affordability will remain out of reach regardless of who receives a tax concession.

The answer has never been about picking winners or losers.

It’s about building enough homes so Australians have somewhere to live.

Until we focus on that, we’ll keep debating the symptoms while ignoring the disease.