The European Commission recently released its first-ever Affordable Housing Plan.

Property prices have outpaced incomes across Europe over the past decade. Home ownership has been pushed out of reach for many.

But for economically successful cities and tourist regions, price and rent trends have been even more stark. For example, the commission reports that “in cities and regions in high demand, even one third of average income is often not sufficient to pay the rent on a 25 square metre apartment”.

The commission’s plan, therefore, is mainly a response to the growing worries about the socially destructive effects of failing housing systems.

Equally concerning, though, is the economic damage wreaked by housing affordability stress. The commission sees this as “impairing labour and educational mobility, weighing on economic growth, innovation, and competitiveness”. It’s a highly pertinent assessment for Australia.

So what does the European plan suggest, and what lessons does it hold for Australia?

As in Australia, the commission’s top prescription for enhanced housing affordability is ramped-up home building. Here, it’s estimated that EU-wide industry output needs to rise by 40% to match current demand.

This is in the same ballpark as the Australian government’s five-year aspiration to enable the construction of 1.2 million new homes from 2025. That’s a 33% increase over the 2005–25 norm.

As desirable as such an objective may be, the scope for significantly enhancing affordability in this way remains questionable. It’s particularly doubtful in light of recently published Australian modelling on the relationship between........

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