Housing’s Political Deadlock Forces Developers to Adapt

Australia’s housing affordability problem is no longer about diagnosis, it’s about political limits and how the market adapts around them. Centuria Bass Credit chief executive David Giffin told The Urban Developer the policy levers capable of shifting affordability were well understood but politically constrained. In response, developers and lenders were adjusting to a system defined by high costs, slow approvals and ongoing supply shortfalls. “There are probably a number of factors,” Giffin said. “One of the major ones is housing policy over the last number of decades.” From his position as a private credit lender, Giffin views housing unaffordability as a structural issue rather than a cyclical downturn, shaped by long-standing tax settings and delivery constraints. “I am talking about things like no income tax on the primary home, no capital gains tax on the primary home and negative gearing,” he said. “Those settings have made it very effective for Australians to store wealth in residential property.” Compared with other developed economies, a larger share of household wealth in Australia is in housing. Rising prices reinforce the cycle. “You can obviously make the argument about which came first but a constantly increasing value of residential real estate naturally means that, if people own homes, a larger proportion of their wealth will sit in that home,” Giffin said. Those same dynamics made reform politically fraught. “Tax-related changes such as capital gains tax are clearly levers governments have available,” he said. “I am not providing personal commentary on what governments should do but politically it is not really possible for either side because they do not want to disenfranchise such a large group of voters by impacting the value of assets that hold the majority of the population’s wealth—their homes.” On the supply side, feasibility had deteriorated sharply, forcing the industry to adapt. Construction costs remain elevated while buyer wage growth lagged, narrowing the gap between what projects cost to deliver and what buyers can afford. “When we talk to developers, particularly those who are not developer-builders, it is the number one reason they cannot get projects off the ground,” Giffin said. ▲ Centuria Bass Credit chief executive David Giffin. “The revenues that are achievable, which are ultimately dictated by wage levels, simply do not work relative to what it costs to deliver housing.” Those costs extend well beyond the build itself. “I mean everything,” he said. “Very extended planning timelines are a big part of it. Developers have to carry assets for very long periods to get planning outcomes and there is a real cost to holding those assets.” Governments have moved on planning reform, skilled migration and housing targets but Giffin questions whether the response matched the scale of the challenge. “Governments at all levels have initiatives to address many of those areas but the question is whether they go far enough or move quickly enough to close the supply-demand gap. At this point, they do not,” he said. The scale of the gap is already visible. Australia’s population reached 27.54 million in March 2025, up more than 423,000 over the year, driven largely by net overseas migration, according to the Australian Bureau of Statistics. Housing delivery has lagged, with fewer than 175,000 new homes completed in 2023-24, the first year of the National Housing Accord—well short of the pace required to meet its five-year target of 1.2 million homes. In the absence of deeper reform, delivery models were changing. “On supply, we are seeing more developers integrate construction capability and I think that will continue,” Giffin said. “Everything I have seen suggests that is the right model. “Developers who already operate integrated models are generally having more success than pure developers.” From a lender’s perspective, this adaptation matters. “That is why we still see strong support for property values, which from a lender’s perspective is positive,” Giffin said. “A market moving sharply backwards is extremely painful for many parties, lenders included.” Looking ahead, Giffin remained cautious on reform but measured on outcomes. “Over the next decade, addressing housing demand will take time,” he said. “The barriers to delivering the required volume are significant. “Ten years is a long time but sitting here today I remain positive on investment conditions, particularly from a debt perspective.” Ultimately, Giffin said, the challenge lies in recognising the system for what it is. “I am not taking a swipe at politicians. Solving this requires a broad, big-picture approach rather than pointing fingers,” he said. “It is not one or two policies. The policies that would make the biggest difference are politically intolerable. “It requires initiatives across a broad range of fronts over the long term.”

Residential
Vanessa Croll
Tue 16 Dec 25

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ResidentialVanessa CrollTue 16 Dec 25

Housing’s Political Deadlock Forces Developers to Adapt

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