It’s Supply, Stupid

In 1992, Bill Clinton’s political advisor made famous the phrase: “It’s the economy, stupid.” The idea was simple: if you improve people’s standard of living, they’ll vote for you. If you don’t, they won’t.

When it comes to housing in Australia today, we need to adapt James Carville’s line: ‘It’s supply, stupid.’

No matter who you vote for in the upcoming May 3 Federal Election, Australia’s population is growing and that growth demands 240,000 new homes every year. At best, we’re managing 160,000. That’s an annual shortfall the size of the city of Wollongong. 

It’s not hard to see why housing is becoming unaffordable. If we don’t fix supply, we don’t fix the crisis. Full stop.

The Demand Distraction

As is the case often, election coverage loves to focus on first-home buyer incentives, as if handing someone a deposit magically creates a house for them to buy. Truth be told, it doesn’t. Boosting demand without increasing supply just pushes the prices higher.

It’s like inviting more people to a dinner party without cooking more food — it just means someone’s going home hungry.

Who’s Actually on the Field?

Let me just say, the Federal Government isn’t the one kicking the ball. They can design policies and throw money at the problem (and they are), but when it comes to getting homes built, that job belongs to state governments and local councils.

Think of the Federal Government as the coach — they can yell from the sidelines, but they’re not the ones running plays on the field.

Follow the Money (and the Roads)

To be fair, the Federal Government is throwing serious money around. The real headline shouldn’t be first-home buyer schemes — it’s infrastructure investment.

Both major parties are pledging $5 billion to fund the roads, sewers, water and electricity networks that make housing projects viable.

•    The Coalition says their $5 billion could unlock 500,000 new homes.

•    Labor plans to reward states that hit housing targets, funneling $3 billion of their commitment directly to those who do.

That’s smart. Without infrastructure, land is just dirt. With it, it’s a development site.

The Approvals Bottleneck

Even if we had the infrastructure tomorrow, we couldn’t build 240,000 homes because we aren’t even approving that many.

Housing approvals have been in steady decline since 2014, the last time we even approved 240,000 homes. Last year, we approved just 170,000 homes. That’s not enough runway for the construction we desperately need.

Why the shortfall? 

Let me explain that – there are two reasons:

•   Red tape — state and local governments aren’t aligned.

•    Lack of urgency — approvals don’t seem to be a performance metric for local councils.

You have to wonder: does anyone at council knock off on Friday and ask, “How many homes did we approve this week?”

Progress, Not Perfection

Here’s the silver lining: we’re moving — slowly — in the right direction.

In 2024, we built 168,049 homes. That’s up 2% year-on-year. Still well below the target, but a step forward, nonetheless.

And with billions of dollars now earmarked for unlocking land, improving infrastructure and rewarding states that hit building targets, we’re finally seeing the political will to match the scale of the problem.

The Real Fix? Density + Infrastructure

Eventually, governments will realise the solution isn’t just more houses — it’s more homes per kilometre of infrastructure. We need denser development near existing roads, pipes and power. We need denser development around the expensive new roads, pipes and power that we do build.

It’s not radical. It’s not ideological.

It’s just economics, stupid.