The effect of housing supply on prices: Expectations versus reality

By Nicholas Garvin

Does building more housing ease price and rent growth?

Past empirical research suggests that it does, which is in line with standard economic theory. But new survey results from the latest McKinnon Poll show that a surprising number of Australians think otherwise.

This two page Micro Note explores this new evidence on Australian ‘supply scepticism’, and compares it with data on the actual relationship between housing prices and supply.

The data refute the sceptics. Sydney areas that built more housing during the decade to 2022 had lower overall price growth.

The Micro Note also explores other characteristics of people with these attitudes, and discusses possible explanations for their views.