Australia’s housing crisis gets discussed constantly. But most of the conversation circles the same few ideas. More supply. Tax reform. Interest rates. Stamp duty.
Last week, a different idea got some oxygen.
Treasurer Jim Chalmers met with a group of leading economists ahead of the May budget. On the table were the usual big-ticket items. Inflation. Tax. Global uncertainty. Housing.
BetaShares chief economist David Bassanese used the meeting to push a different angle. Not another tweak to negative gearing or stamp duty thresholds. Something more structural.
Decentralisation.
The Case for Spreading Out
Bassanese’s argument is straightforward. Australia is heavily urbanised. Most of the jobs that pay well sit inside a handful of capital cities. So most of the population follows. And when millions of people compete for housing in the same geography, prices do what they always do.
They rise.
His suggestion was to look at the United States as a reference point. A more decentralised economy. More mid-sized cities with genuine employment bases. Less concentration of opportunity in a small number of postcodes.
The numbers make the problem hard to ignore.
The median house price in Sydney has reached $1.76 million. Melbourne, Brisbane, Perth and Adelaide are all above $1 million. Across every capital combined, the average sits at $1.28 million. Meanwhile, the average Australian income is around $100,000 per year.
A separate Cotality report found the median house price has climbed at 2.5 times the pace of household income since 2020. That gap does not close through minor policy adjustments.
What This Means for Builders
For builders, regional decentralisation is not an abstract policy idea. It is a pipeline question.
If genuine economic activity follows workers into regional centres, housing demand follows. That means land releases, new estates, infrastructure upgrades, and sustained construction programs in markets that currently struggle to maintain consistent volume.
The Kings Forest story on the NSW North Coast offered a recent example of what happens when regional land supply finally moves. Over 50 years in the making, the first lots released almost immediately absorbed demand. The Tweed Coast had been starved of new supply while prices in nearby estates moved well beyond the reach of ordinary buyers.
Regional development done well does not just help first home buyers. It gives builders in those markets something they often lack. Depth. A pipeline long enough to justify investment in teams, trades and systems.
The Tax Debate Running in Parallel
While Bassanese was making the case for decentralisation, another conversation was happening around the same table.
The government is reportedly considering reducing the capital gains tax discount from 50 per cent to 33 per cent, specifically for property investors. The proposal would retain the existing discount for shares and other investments.
Economist Saul Eslake backed the approach, arguing that investor activity in existing housing stock pushes prices up without adding a single new home to the market.
His position is that skewing the tax treatment toward new housing construction, rather than existing properties, would redirect investment toward supply. More rental housing built from scratch. Less competition for homes that already exist.
For builders, that distinction matters.
A CGT discount that applies to new builds but not existing properties changes where investor money flows. Done correctly, it could shift demand toward construction rather than competition. That is a different kind of pressure on the industry. The useful kind.
The Harder Conversation
Neither idea is simple to execute.
Decentralisation requires more than a policy announcement. It requires employers to move, or to be incentivised to move. It requires infrastructure investment well ahead of population growth. It requires planning systems that can respond to demand without a 50-year lag.
CGT reform requires political will in an election environment, and a design careful enough not to simply redirect speculation without actually improving supply.
Both are medium to long-term plays. Neither solves the crisis by the next financial year.
But that is the point.
The housing affordability problem in Australia was not created by one policy mistake. It was built over decades through a combination of underinvestment in regional infrastructure, tax settings that rewarded holding over building, and planning systems that slowed supply while demand kept growing.
Fixing it requires thinking at the same scale.
What Builders Should Be Watching
Budget season always generates noise. Announcements get made. Some stick. Most are softer than they first appear.
But two threads are worth following closely.
First, whether the CGT proposal makes it through in a form that genuinely redirects investment toward new construction rather than simply reducing investor activity overall. A blanket reduction that removes investor demand without new mechanisms to channel it toward supply would tighten the rental market further without improving affordability.
Second, whether any serious regional development commitment emerges. Not a funding announcement. An actual framework. Infrastructure commitments, employer incentives, planning coordination between state and federal governments.
The builders who thrive in the next decade will not just be the ones who build efficiently. They will be the ones who positioned themselves in the right markets at the right time.
Decentralisation, if it happens, would redraw those markets significantly.
The Bottom Line
Australia does not have a housing affordability problem because builders are failing. It has one because the system has concentrated demand into a handful of postcodes while constraining the supply of land, labour and approvals that would allow builders to meet it.
The Treasurer is hearing ideas. Some of them are the right ones.
The question, as always, is whether the response matches the scale of the problem.
Builders know better than anyone that planning ahead matters. The industry will be watching whether policymakers have learned the same lesson.
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