Where the responsibility for housing affordability lies

“The way we see it, all parties are ultimately accountable to the community and to those most in need of affordable housing,” he said.

“Most importantly, the state and Commonwealth governments should play to their respective strengths.

“For the Commonwealth Government that means a focus on tax concessions, together with the laws around foreign investment.

“For us it means the ability to implement our own initiatives and direct much-needed funds to those most in need.”

Mr Pallas said retaining the state’s funding autonomy is of the utmost importance.

“Our Homes for Victorians package was the largest housing policy offering in our state's history,” he said.

“We estimate it will contribute more than $3.7 billion to the Victorian economy and create something like 50,000 new construction jobs over the next four years.

“But its benefits extend much more beyond mere numbers, ultimately it's about a fundamental human right – the right to decent stable affordable accommodation.

“This involves shifting the balance back to first home buyers rather than investors, to alleviating homelessness and shoring up Victoria's housing stock for future generations.”

Mr Pallas said that unlike the federal government, the state government isn’t shrugging its shoulders and putting the issue in the too hard basket.

“We provided more than $2 billion in support for social housing including a new Social Housing Growth Fund,” he said. 

“This fund will provide an ongoing stream to deliver additional social housing for the most vulnerable Victorians.

“It'll build new social housing in partnership with housing associations, the private sector, the philanthropic sector and local governments, as well as financing a program where housing agencies lease properties from the private market.

“It's expected that over the next five years the fund will support around about 2200 new social housing places.

“Many of these new dwellings will boost employment and activity in the Victorian construction sector.”

Mr Pallas said that when it comes to their federal counterparts what they are seeking is two-way accountability and a partner that works with them not against them.

“It's essential that the states retain control over planning and zoning issues,” he said.

“Equally important is a need for additional federal funding for homelessness services, together with social housing.

“It's essential that we get this right, I'm not saying that we have all the answers, this is the most complex of issues and there are no easy solutions.

Community Housing Industry Association Executive Director, Peta Winzar said that while the numbers in the Victorian State Budget sounded like big dollars, it was still not enough.

“If I have a look at what Victoria needs to do just to stand still in terms of social housing, it needs to produce about another 2000 units of social housing every year,” she said.

“If I was to put a cost on that I think around about $1.5 billion a year would start to make an inroad into that, but wouldn’t be the complete answer.”

Ms Winzar said that at the rate Australia’s population is growing it needs another Canberra every 18 months.

“Perhaps if we were some other country we might think already about where we put those extra Canberras,” she said.

“And we might start building the transport and other infrastructure for them now, knowing that we'd need them in five, 10 or 20 years’ time.

“But we're not doing that yet and so I think the challenge for the planning systems of state governments and the federal government is to turn its mind to this.

“While what we've got from the federal and New South Wales and Victorian governments in their most recent budgets is a really encouraging start, it's got a long way to go.”

Ms Winzar said Australia needs to find a way to encourage institutional investment into affordable and social housing if governments can’t meet the challenge but First State Super Chief Investment Officer, Damian Graham said the elevated housing prices play on the minds of a lot of institutional investors when they're looking at that asset class. 

“From a risk perspective an Australian fund like First State Super, we invest broadly, about $85 billion, on behalf of our members,” he said.

“It already has significant exposure to investments that are linked to the residential housing cycle.

“Typically, most funds will have around 20 per cent plus of their total assets that'll link to that cycle.

“So clearly this level of exposure is already substantial and we need to carefully consider the risk adjusted return of any investment opportunity that would raise this level of exposure.”

University of Queensland Faculty of Business, Economics and Law Associate Professor, Dr David Morrison said because Australia is a federation our conflicting laws give us perverse incentives, one of these being the taxation system.

“The federal/state divide around taxation is a bit of a problem for us and because it is a complex problem, it is one that is very difficult, if not impossible to unravel,” he said.

“Because the federal government, for example, levies income tax and is responsible for capital gains tax, that gives the federal government a set of incentives.

“And of course, state governments have their own incentives around stamp duty and land tax.

“But the difficulties around how property is taxed are significant and so I was very pleased to hear of the removal of stamp duty on first home buyers up to $600,000.

“And not giving stamp duty relief to investors I think is also fair enough.”