Building more apartments will not solve Australia’s housing affordability crisis unless policymakers address rising house prices and investor activity — ‘Spillovers’ led by house prices indicate investors shifting capital between cities, in search of higher returns

Excerpts from [article](https://www.unsw.edu.au/newsroom/news/2026/06/building-more-apartments-wont-ease-housing-crisis-new-research) by Samantha Dunn:

*Australia’s housing affordability crisis is being driven less by a shortage of apartments than by system-wide price pressures originating in the market for freestanding homes, according to new research.*

*The* [*study*](https://www.sciencedirect.com/science/article/pii/S0264275126004804?via%3Dihub)*, published in Cities, challenges a key assumption underpinning current housing policy: that increasing apartment supply will substantially improve affordability.*

*Researchers analysed housing data across Sydney, Melbourne, Brisbane, Perth and Adelaide over nearly three decades. They found price movements are led by the house market, affecting the whole system, including apartments – a process known as a spillover.*

*“House prices are driving the whole system,” says study coauthor Professor Chyi Lin Lee from UNSW’s School of Built Environment. “When house prices move, they significantly affect units, but not the other way around.”*

*[…] “The assumption that units can substitute for houses at scale doesn’t hold in the data. Instead, the widening gap between house and unit prices reflects deeper structural forces, particularly how price pressures originate in the house market and spread across the system.”*

*[…] Nearly 80% of price spillovers occur between cities rather than within them, a pattern the researchers say cannot be explained by normal housing demand.*

*“Because Australia’s capital cities are widely dispersed, cross-city price movements are unlikely to reflect typical housing needs. Instead, they indicate investors shifting capital between markets in search of higher returns,” says Prof. Lee.*

*This pattern is particularly evident in the detached housing sector.*

*“Inter-city spillovers are consistent with investment-driven behaviour,” he says, adding to evidence that housing is increasingly functioning as a financial asset. This creates a cycle where price growth attracts investment, transmitting pressures nationally and worsening affordability.*

Well not building more housing will help much less. The thing is if there is an oversupply of housing prices will come down. That’s the basic law of supply and demand. We should be doing everything we can to counter the high cost of housing.

“Study of a contrived model with no grounding in reality disproves a disingenuous straw man argument that no one is making”

Fixed that for you

The west has let the parasite/investor class hollow out the middle class all over the world.

I have no idea how houses became an investment and governments hitches their wagon to the tax. This was always going to end poorly.

If this is true that investors shift capital between cities for greater returns it means that there should be housing available in cities investors aren’t interested in.