9 No really. Why so?

The housing affordability is frequently in the public attention. At the surface level, the crisis manifests in several immediate, observable symptoms, including:

• Escalating house prices makes homeownership increasingly out of reach for young people, particularly in Sydney, Melbourne, and Brisbane, due to soaring property prices.
• Rents have surged, with young renters struggling to secure stable and affordable housing.
• Declining homeownership rates with the proportion of 25–40-year-olds who own a home dropping significantly compared to previous generations.
• High deposit requirements mean many young Australians find it impossible to save for a home deposit due to stagnant wages and rising living costs.
• Increasing reliance on ‘The Bank of Mum and Dad’ with a growing number of first-home buyers depending on family financial support to enter the market.
• Rise in housing insecurity and homelessness with more young Australians are experiencing precarious housing situations; some forced into shared living arrangements or couch surfing.

In the case of housing in Australia, several long-term trends indicate a worsening crisis:

• House prices are outpacing wage growth: Since the 1990s, property values have risen dramatically, while real wages have stagnated, widening the affordability gap.
• Rent increases are outpacing inflation: Rental prices in major cities have consistently grown faster than income levels.
• Property investment by older generations is increasing, with more baby boomers and Gen Xers own multiple investment properties, reducing the stock available for first-home buyers.
• Reduction in social and affordable housing: Government investment in public and social housing has declined, exacerbating the rental market’s pressure.
• Property is increasingly a wealth-building strategy: Housing has increasingly been treated as a financial asset rather than a basic necessity.
• Boom-and-bust housing cycles: Periods of rapid price growth are often followed by brief corrections, but overall affordability continues to decline.
• Policy incentives are benefiting investors over first-home buyers: Tax policies such as negative gearing and capital gains tax (CGT) concessions favour investors, maintaining high property demand and prices.
• Generational divide in homeownership is increasing, with young Australians waiting longer to buy homes, while older generations accumulate wealth through property.

• Tax policy is favouring investors with negative gearing and CGT discounts making property investment highly attractive. This leads to speculative buying and inflating house prices.
• Land-use regulations and zoning laws often restrict medium- and high-density developments, limiting housing supply in key urban areas.
• Bank lending practices often prioritise lending to property investors over first-home buyers, contributing to price escalation.
• Government policies have failed to expand public housing at the rate required to meet growing demand.
• Affordable housing is often located in outer suburbs with poor transport links and fewer job opportunities, limiting accessibility for younger workers.
• Foreign buyers, particularly in major cities, have added pressure to housing demand, although recent policy changes have sought to curb this.
• Despite economic growth, real wage increases have lagged behind the rising cost of living, making it harder for young people to save for a home deposit.
• Boomer wealth concentration in housing: Older generations hold a disproportionate share of housing wealth, and intergenerational wealth transfer is uneven, exacerbating inequalities.

These structural issues lock in affordability challenges and reinforce inequalities in access to housing.

• Homeownership remains the Australian Dream with strong societal expectation that owning property is a marker of success. This reinforces demand for homeownership at all costs.
• Housing is viewed as an investment rather than a social good: The view that property is primarily a wealth-building tool rather than a fundamental right has shaped policies that prioritise market efficiency over affordability.
• “Just Work Harder and Save More”: The belief that young people struggle to buy homes due to lifestyle choices rather than systemic barriers ignores rising house prices, stagnant wages, and growing living costs.
• Political reluctance to regulate the property market stems from the assumption that free-market principles should dictate housing prices and supply.
• Many homeowners assume that passing down property wealth within families is natural and beneficial, despite the growing wealth divide.
• Communities often oppose apartment developments due to concerns about neighbourhood character and property values, limiting the supply of affordable housing.
• Governments often prioritise short-term political gains (e.g., first-home buyer grants) rather than structural reforms that could create long-term affordability.

A critical systems perspective would suggest, for example, that the actual purpose of the Australian housing system is not to provide affordable housing but to sustain a property investment economy that benefits existing asset holders. They would argue that:

• If housing affordability were truly a priority, we would see falling housing costs, stronger tenant protections, and increased social housing, but we do not.
• If homeownership for young people were a genuine goal, policies would disincentivise speculative investment, but they instead fuel it.
• If housing were viewed as essential infrastructure, planning laws and funding models would prioritise affordable housing construction, but instead, market-driven development dominates.

In the Australian housing market, despite widespread concern over affordability, powerful stakeholders continue to benefit from the existing system, creating strong resistance to transformative change. Investors enjoy tax benefits. Existing Homeowners (Boomers and Gen Xers) benefit from rising property values, which increase household wealth, enabling homeowners to use real estate for retirement security, investment leverage, or inheritance planning. Banks and Financial Institutions benefit from the mortgage industry, as one of the most profitable sectors.

Proposed reforms (for example changing negative gearing) directly threaten these and other powerful vested interests, making change politically and economically difficult.

In summary, Stroh’s (2015) ‘payoffs to the status quo’ explain why housing affordability remains an intractable problem in Australia, because the existing system benefits powerful stakeholders who resist structural reform. Until these incentives are altered, policies will likely continue to favour investment and wealth accumulation over equitable housing access, leaving younger Australians locked out of homeownership and struggling in a rental market that prioritises profits over people.

A critical systems thinker (CST), drawing from Critical Systems Practice (CSP), would focus on power structures, inequalities, and underlying ideologies that shape the housing system. They would question who benefits from the current system, expose hidden assumptions, and challenge dominant narratives (e.g., housing as an investment vs. a social good). CST would explore multiple stakeholder perspectives, including renters, Indigenous groups, and low-income earners, and advocate for participatory approaches that empower marginalised voices. They might propose transformative interventions such as rethinking land ownership models, de-commodifying housing, or embedding Indigenous knowledge into urban planning.

A systems dynamics theorist (SDT), influenced by Jay Forrester’s work, would model the feedback loops and delays in housing markets to understand how policy levers (e.g., tax incentives, interest rates, supply constraints) drive price fluctuations. They would use simulation models to predict how interventions (e.g., increasing supply, rent caps) might create unintended consequences. SDT would focus on policy efficiency but may not critically examine social power dynamics or the ethics of market-driven housing.

Three key feedback loops:

1. House Prices ↔ Investor Demand (Reinforcing Loop)
   • Higher house prices attract more investors, expecting capital gains.
   • Increased investor demand further drives up prices, making housing less affordable for first-home buyers.
2. Investor Demand ↔ Rental Prices (Reinforcing Loop)
   • Rising rental prices increase returns for investors, encouraging more property investment.
   • Increased investor demand reduces available housing for owner-occupiers, keeping rents high.
3. Housing Supply → House Prices (Balancing Loop)
   • Increased housing supply can reduce house prices by meeting demand.
   • However, construction costs, planning delays, and zoning restrictions slow supply growth, weakening this balancing effect.

Additionally, government incentives (such as negative gearing and tax policies) fuel investor demand, exacerbating the reinforcing loops. Meanwhile, interest rates act as a balancing force, suppressing demand when they rise.

This systemic perspective shows why housing affordability remains challenging—reinforcing loops keep prices high, while balancing loops are weak or delayed. ​