A 7% price fall won't fix the housing crisis — policy must aim at a generation

NAB’s chief economist has been blunt: a projected 7 per cent fall in property prices will not resolve Australia’s housing affordability problems, and those problems will take a generation to fix. That sharp assessment should be the starting point for public debate rather than an excuse for complacency. Across cities and regions, affordability is less about short-term price movements than about a sustained mismatch between housing supply and the needs of households. A modest correction in prices can ease some pressure for buyers and reduce headline mortgage debt statistics, but it does little to relieve chronic shortages of rental stock, address the scarcity of affordable family-sized homes, or fix the regulatory and planning settings that delay new housing. For renters and those locked out of homeownership, a temporary fall in prices offers cold comfort. Many are grappling with rising living costs, insecure work and the reality that supply constraints — slow approvals, limited social housing and infrastructure shortfalls — mean there simply aren’t enough homes where people need them. The NAB warning that fixing these problems will take a generation is not a plea for inaction; it is a challenge to governments at all levels to match the scale and timeframe of the problem with long-term policy that goes beyond short electoral cycles. What that should look like in practice is a sustained program to increase the supply of diverse housing types in well-located areas, coordinated investment in transport and services so new homes are liveable, and a rethink of taxation and incentives that can trap land out of productive use. Social and affordable housing should be treated as critical infrastructure, not as a discretionary line item, and funding models should recognise that building capacity takes decades to develop. Markets will continue to adjust and macroeconomic forces will push prices in both directions. But relying on cyclical price falls to solve structural problems is a mistake. Policymakers must accept that meaningful progress requires durable institutions and cross-party consensus on planning, financing and tenure innovation. That might mean difficult trade-offs — changes to stamp duties, inclusionary zoning or sustained public investment — but it is preferable to leaving whole cohorts of Australians in precarious rental situations or permanently excluded from the housing market. For households, the NAB prognosis is a warning to plan for the long haul. For governments, it is a call to treat housing as an intergenerational challenge requiring intergenerational solutions. A one-off price dip is not a solution; what is needed is a durable program to increase supply, diversify tenure and ensure that where people live supports work, schooling and community. That is how a generation’s housing problem becomes a solvable public task.