Why is buying a home or renting in Australia so difficult? If you read the mainstream news and commentators, the answer to the housing crisis is that we need to build more houses and we need to remove regulations stopping developers from building more.
The truth however is that over decades the banks, developers and ultra-rich landowners have created a system that connects local home debt to the massive over-accumulation of the global financial system. If this sounds complicated, it is because the system has been designed to be unintelligible.
The core concept to understand that underpins the housing crisis is the crisis of over-production. Capitalism perpetually generates a surplus of wealth. This surplus must be reinvested to make even more profit. This is the coercive logic of capitalist competition. If capital owners cannot find profitable places to invest their surplus, the individual capitalist faces personal ruin and the entire economic system faces a crisis where uninvested capital is devalued or destroyed.
Why does this matter? Because unless we understand the dynamic process that capitalism extracts money and value from workers, not just in the workplace but as consumers, renters and debtors, we cannot develop proper strategies for responding.
For over a century, the ultimate sponge for this excess capital has been the city and the city’s real-estate. From nineteenth-century Paris to modern metropolitan areas in 2026, the ultra-rich have invested their surplus wealth into urban infrastructure and property speculation. Constant, massive infrastructure projects, social displacement and debt-funded consumerist lifestyles is how the capitalist system stabilises itself.
This dynamic explains why a housing crisis exists even when there is enough physical housing. Housing is built to serve as a financial asset for the global ultra-rich and the commercial banks rather than as shelter for people.
Read more: What if the banks make housing less affordable?
Although this system started (more or less) in the post-WW2 USA, the process of urban “development” is now well and truly global. Deeply integrated global financial markets use their flexibility to debt-finance massive property booms worldwide.
Because developers are motivated to absorb the massive surpluses of the wealthy, they prioritise building luxury apartments and speculative properties that offer the highest financial returns. When global capital pours into real estate in Melbourne, Sydney, Singapore or Lahore, land values and housing costs skyrocket.
Consequently, lower-income residents are actively displaced from their communities to make way for these highly profitable developments, leaving everyday people locked out of the market while homes are traded as investment vehicles. The cost of housing is essentially disconnected from local economic realities. This is why commentators like Gary Stevenson (of Gary’s Economics) point out that the housing crisis is happening world-wide, it’s not just a local or national crisis.
To reiterate: the result of housing being treated primarily as a financial asset rather than a place to live means that real-estate speculators and billionaires buy up properties to absorb their excess wealth. These people have absolutely no incentive to bring housing prices down.
Australia is highly exposed to this global dynamic. Our housing market and general asset inflation during the Howard era of the late 1990s and 2000s was inflated by the mining boom and supplying raw materials for the rapid economic growth of China. Local property markets became a primary vehicle for absorbing domestic Australian and global capital surpluses. Millionaires and mining billionaires bought up land, real-estate and houses.
We are often told by YIMBYs, developers and banks that the solution to the housing crisis is simply to build more.
Over the last ten years since 2014, Australia has built more houses than our population has increased. If more building more housing was the “solution” to the housing crisis and affordability, how could this be true?
It’s because building luxury apartments or investment properties just absorbs more surplus capital for the rich, it does not make more housing available or affordable for everyday people.
And in some (many) instances property speculators would rather leave houses vacant than make them available to buy or rent.
empty, as seen in our data, but more significantly, owners of development-ready land rationally bank it in
search of windfall gains, especially via rezoning and planning permission, rather than building
immediately within existing rules.” Source: Prosper Australia, Speculative Vacancies Report 2025
“Supply” therefore is not a neutral term. It is a useful myth used by real-estate speculators and developers. They are not interested in more supply of public housing, or more supply of public amenity.
As cities are continually redeveloped to increase financial returns, lower-income residents are pushed out. This process is known as accumulation by dispossession, where the people who actually make the city function are exiled to the fringes.
There are many examples of this. Two notable examples are:
- The destruction or sale of public housing estates in the inner city, replaced by apartments for the professional and investor classes; and
- The Airbnbification of neighbourhoods, where property owners evict long-term renters for the more lucrative short-term rental market of tourists.
Both types of displacement are examples of creative destruction. Capital cannot stabilise itself without violently destroying the old — whether through the physical demolition of public housing estates or the algorithmic encroachment of Airbnb. The human cost is always far-reaching and often violent.
This housing crisis is compounded by decades of wage repression and debt encumbrance. When ordinary wages stagnate but the cost of housing skyrockets, the economic system is actively extracting value from you outside of the workplace, exploiting you as a consumer.
Similarly, we can see how widespread bank provided mortgages for home-ownership deeply shaped the politics of generations. The creation of debt-funded outer suburbs directly reinforced modern consumerism by forcing a radical transformation in daily lifestyles. Moving to the newly built suburbs meant families needed to consume entirely new types of manufactured goods to live their daily lives. New housing products like TVs, refrigerators, air conditioners, multiple cars, and vast amounts of oil.
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And when the Boomers, and the middle class generally, had their wealth tied up in the value of their home, their political focus shifts toward defending their property values and protecting individualised identities.
The financially-driven culture of possessive individualism caused citizens across the Global North to increasingly withdraw their support for collective social action and instead prioritise the maintenance of the status quo.
This actively and deeply impacted voting behaviour in Australia (and the UK after Thatcher privatised council housing) and led to a generation of conservative government.
Read more: How finance hurts workers and strangles the economy
Low wages and debt also demobilises workers. Heavy mortgage debts financially bind workers to their jobs, making them significantly less likely to risk going on strike because they cannot afford to miss payments. It is a form of repression by capital owners to preserve the capital order.
To survive in this system, everyday people are forced to take on massive debts just to put a roof over their heads. This debt binds workers, shifting the extraction of wealth away from the workplace and directly into the home via rent and mortgage payments.
To fix this, we must demand a collective right to exercise democratic control over how our surpluses are used and how our cities are designed and rebuilt.
Read more: What if we abolished household debts?
In Australia, this could look like pushing local councils to remove housing from speculative markets and instead prioritise developments that are affordable and sustainable, and community owned or controlled through community land trusts. At the same time, state and national governments need to develop public financial institutions, to break the coercive power of commercial banks.
Housing must be entirely decommodified and definancialised. The housing crisis will not end until we stop treating our homes as bank accounts for the wealthy.