June 9, 2025 • 7 mins
If supply is the problem, why don’t governments just build more homes?
Join Sean Aylmer & Michael Thompson as they answer questions on business, investing, economics, politics and more.
If you have your own question for Ask Fear & Greed, get in touch via our website, LinkedIn, Instagram or Facebook!
Find out more: https://fearandgreed.com.au
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Welcome to Ask a Fear and Greed, where we answer
questions about business, investing, economics, politics and more. I'm Michael
Thompson and hello Sean Aleman. Hello Michael, A cynical one
for you today, Sean, your favorite kind. Here's the question,
why don't governments just build more homes if supply is
(00:23):
the problem? So we're clearly talking about the housing crisis
here and the fact that we don't have enough houses
to go around, and the prices are going up and
people are finding it hard to get into the market
in the first place. And if supplies the problem, then
why don't governments just build more homes?
Speaker 2 (00:39):
Well, it's actually not a cynical question because that could
be an answer. So Australia, we've got about three hundred
and fifty thousand social housing dwellings is how they measure it, Yep,
that's about three point eight three point nine percent of
all households are social housing in Australia. Now that's there's
(00:59):
almost about half that number of gen so one hundred
and sixty five thousand applicants on the waiting list, So
the waiting list is huge at three point eight percent,
that's actually about twenty years ago that number was closer
to six percent. So what you find in Australia is
that we have reduced social housing. Now I suppose we
(01:23):
should actually just take it a little time out here.
What is social housing? We're talking about community housing, public housing.
It's owned and managed by government or sometimes it's not
for profit organizations. Rents are almost always below market rates.
Often they're based on a percentage of tenants income. Supposedly
it's allocated based on need rather than competitive market. So
(01:47):
the question comes down to why doesn't the government build
more of that type of housing when we need it?
And I actually do think that's a fair question. Australia
home has been a really big thing and the great
Australian dream, and in some ways that plays into it
a little bit. And so since the war, since World
(02:07):
War II, we have reduced public housing enormously and you
kind of allowed the private sector to provide enough housing
that it hasn't isn't necessarily working right now. There have
been other times though, where there's been plenty of supplying
the market and really not enough demand and people who
have got investment homes haven't been able to actually find tenants,
(02:31):
and prices have fallen. So it is very sickly coal.
Speaker 1 (02:36):
Okay, but I suppose this is the question. Wasn't cynical
enough allow me to be cynical for you? Then what
about then when we hear say the government talking about
they will build one point two million new homes in
five years, for instance, and which is a very lofty tagle,
(02:56):
which sits outside essentially of social housing, and that is
essentially clearing the way right and making it possible and
opening up land and all of these things to allow
more properties to be built, new stock to come into
the market, to increase supply. Is part of the challenge here,
(03:18):
the fact that even with that one point two million
and this kind of plan to achieve that by I
think it's twenty twenty nine going to do it, they're
still going to come up short. So is there an
element of yes, the government could in theory just build
more houses or make it possible for people to build
more houses, but they're just not able to because there's
too many other forces, the availability of tradees to actually
(03:40):
do it. The hold ups when you get to kind
of local government and state government and zoning issues that
there's just too many other problems preventing these housing targets
from being met.
Speaker 2 (03:52):
Yes, So the Albanezy government's national housing targets I think
are a good thing where they and at the moment
need to be running at two forty thousand a year
and I think building approvals are running about one eighty
thousand a year, so we're about twenty five percent below
where we need to be. What the government government needs
to do is train more tradees, reach to address your issues,
(04:17):
make sure local government opens up the ability for organizations
for land to be developed and rezoned. Make sure banks
are lending to construction companies that's another big one at
the moment. And obviously find land that can be used
and zoned for residential housing. That to me is what
(04:40):
government should be doing. And then the market takes over
and builds those places. So if that was easier, if
there were trades around and construction companies could be get
loans from banks and there were sites to do it,
you get a lot more houses built because there's a
market for it, so go for it. And you can
build stuff really quickly. You know, if you're having your
house knockdown, you build it takes twelve months. So if
(05:01):
you think that you could build a unit block in
eighteen months, and that might end up having one hundred
homes in it. You really could get things going. I
don't think it's the government's role to build and own
a lot of homes. Now, some of the equity ideas
(05:22):
that the government has with first time buyers, that's sort
of getting into that territory, and I don't think that's
a bad thing. Like, I think that's kind of the
government owning some equity and then when the first time
buyer sells out or they can buy the government out,
that's kind of sensible. But I don't think the government
needs to own huge amounts of social housing if we
(05:42):
can avoid it.
Speaker 1 (05:43):
Okay, all right, So, I mean the question is a
good one, and the question is actually probably one of
those ones that if you were to drop that question
at a dinner party, you're probably going to end up
with a fairly lively discussion afterwards that hey, the government
should just build more houses and there you fix the
housing crisis. It's not as simple, it's not super straightforward,
but there is actually probably enough in there that would
(06:06):
smooth the way through, you pave the way to more
supply coming onto the market.
Speaker 2 (06:10):
Yeah, you'd have so I mean place on in the UK,
they've got a huge social housing I think they're like
fifteen or twenty percent social housing. But yeah, I think
smoothing the way is the best option for government from
my POINTAE Okay, all right.
Speaker 1 (06:24):
I reckon. That's one of my favorite questions we've had
in a little while. Actually, it's one of those ones
that just has a lot of room to debate.
Speaker 2 (06:32):
Yes, yes, take that one to your next dinner party.
Speaker 1 (06:35):
Eh. Yeah, you can see all these invitations for you
and me dinner parties. Just well listen to that. That's
them drying up all over the city. All right, Thank
you very much, Sean.
Speaker 2 (06:46):
Thanks Michael.
Speaker 1 (06:47):
If you've got your own question that you'd like us
to examine, potentially debate, then fearangreed, dot com, dot au
send it on through there or any of these social
media platforms. Just drop us a message and we will
pop it on the list. Michael Thompson, And that was
asked fair and great.
Welcome to Ask a Fear and Greed, where we answer
questions about business, investing, economics, politics and more. I'm Michael
Thompson and hello Sean Aleman. Hello Michael, A cynical one
for you today, Sean, your favorite kind. Here's the question,
why don't governments just build more homes if supply is
(00:23):
the problem? So we're clearly talking about the housing crisis
here and the fact that we don't have enough houses
to go around, and the prices are going up and
people are finding it hard to get into the market
in the first place. And if supplies the problem, then
why don't governments just build more homes?
Speaker 2 (00:39):
Well, it's actually not a cynical question because that could
be an answer. So Australia, we've got about three hundred
and fifty thousand social housing dwellings is how they measure it, Yep,
that's about three point eight three point nine percent of
all households are social housing in Australia. Now that's there's
(00:59):
almost about half that number of gen so one hundred
and sixty five thousand applicants on the waiting list, So
the waiting list is huge at three point eight percent,
that's actually about twenty years ago that number was closer
to six percent. So what you find in Australia is
that we have reduced social housing. Now I suppose we
(01:23):
should actually just take it a little time out here.
What is social housing? We're talking about community housing, public housing.
It's owned and managed by government or sometimes it's not
for profit organizations. Rents are almost always below market rates.
Often they're based on a percentage of tenants income. Supposedly
it's allocated based on need rather than competitive market. So
(01:47):
the question comes down to why doesn't the government build
more of that type of housing when we need it?
And I actually do think that's a fair question. Australia
home has been a really big thing and the great
Australian dream, and in some ways that plays into it
a little bit. And so since the war, since World
(02:07):
War II, we have reduced public housing enormously and you
kind of allowed the private sector to provide enough housing
that it hasn't isn't necessarily working right now. There have
been other times though, where there's been plenty of supplying
the market and really not enough demand and people who
have got investment homes haven't been able to actually find tenants,
(02:31):
and prices have fallen. So it is very sickly coal.
Speaker 1 (02:36):
Okay, but I suppose this is the question. Wasn't cynical
enough allow me to be cynical for you? Then what
about then when we hear say the government talking about
they will build one point two million new homes in
five years, for instance, and which is a very lofty tagle,
(02:56):
which sits outside essentially of social housing, and that is
essentially clearing the way right and making it possible and
opening up land and all of these things to allow
more properties to be built, new stock to come into
the market, to increase supply. Is part of the challenge here,
(03:18):
the fact that even with that one point two million
and this kind of plan to achieve that by I
think it's twenty twenty nine going to do it, they're
still going to come up short. So is there an
element of yes, the government could in theory just build
more houses or make it possible for people to build
more houses, but they're just not able to because there's
too many other forces, the availability of tradees to actually
(03:40):
do it. The hold ups when you get to kind
of local government and state government and zoning issues that
there's just too many other problems preventing these housing targets
from being met.
Speaker 2 (03:52):
Yes, So the Albanezy government's national housing targets I think
are a good thing where they and at the moment
need to be running at two forty thousand a year
and I think building approvals are running about one eighty
thousand a year, so we're about twenty five percent below
where we need to be. What the government government needs
to do is train more tradees, reach to address your issues,
(04:17):
make sure local government opens up the ability for organizations
for land to be developed and rezoned. Make sure banks
are lending to construction companies that's another big one at
the moment. And obviously find land that can be used
and zoned for residential housing. That to me is what
(04:40):
government should be doing. And then the market takes over
and builds those places. So if that was easier, if
there were trades around and construction companies could be get
loans from banks and there were sites to do it,
you get a lot more houses built because there's a
market for it, so go for it. And you can
build stuff really quickly. You know, if you're having your
house knockdown, you build it takes twelve months. So if
(05:01):
you think that you could build a unit block in
eighteen months, and that might end up having one hundred
homes in it. You really could get things going. I
don't think it's the government's role to build and own
a lot of homes. Now, some of the equity ideas
(05:22):
that the government has with first time buyers, that's sort
of getting into that territory, and I don't think that's
a bad thing. Like, I think that's kind of the
government owning some equity and then when the first time
buyer sells out or they can buy the government out,
that's kind of sensible. But I don't think the government
needs to own huge amounts of social housing if we
(05:42):
can avoid it.
Speaker 1 (05:43):
Okay, all right, So, I mean the question is a
good one, and the question is actually probably one of
those ones that if you were to drop that question
at a dinner party, you're probably going to end up
with a fairly lively discussion afterwards that hey, the government
should just build more houses and there you fix the
housing crisis. It's not as simple, it's not super straightforward,
but there is actually probably enough in there that would
(06:06):
smooth the way through, you pave the way to more
supply coming onto the market.
Speaker 2 (06:10):
Yeah, you'd have so I mean place on in the UK,
they've got a huge social housing I think they're like
fifteen or twenty percent social housing. But yeah, I think
smoothing the way is the best option for government from
my POINTAE Okay, all right.
Speaker 1 (06:24):
I reckon. That's one of my favorite questions we've had
in a little while. Actually, it's one of those ones
that just has a lot of room to debate.
Speaker 2 (06:32):
Yes, yes, take that one to your next dinner party.
Speaker 1 (06:35):
Eh. Yeah, you can see all these invitations for you
and me dinner parties. Just well listen to that. That's
them drying up all over the city. All right, Thank
you very much, Sean.
Speaker 2 (06:46):
Thanks Michael.
Speaker 1 (06:47):
If you've got your own question that you'd like us
to examine, potentially debate, then fearangreed, dot com, dot au
send it on through there or any of these social
media platforms. Just drop us a message and we will
pop it on the list. Michael Thompson, And that was
asked fair and great.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.