Australia’s Housing Accord is a five-year plan, and it is performing exactly as five-year plans do. It promised 1.2 million new homes by mid-2029. A third of the way in, the nation has delivered a quarter of them and New South Wales a fifth of its share. In Moscow the planners at least falsified the statistics. Ours publish them quarterly and announce another summit.

A useless plan would be bad enough. This one rests on a false diagnosis, and a false diagnosis licenses every quack remedy that follows. The diagnosis is a housing shortage, repeated daily by ministers, developers and economists who have never looked at the one number that would settle it.

That number is how many people live in each dwelling. If homes were short, people would be squeezing into the ones that exist. In Sydney, the supposed epicentre, the opposite has happened. Persons per dwelling fell from 2.65 in 2002 to 2.54 in 2025. The stock grew 44 per cent and the population 37 per cent. Sydney houses more people than when the crisis was first proclaimed, with no less space per adult once smaller families are allowed for. The shortage exists in press releases and nowhere else.

Then what has gone wrong? Rents rose with incomes, migration and the general price level, and fell as the stock grew. The post-pandemic migration surge shows how it works. Canberra let in a record intake in a single year. Houses take years to build. For a time the arrivals crowd into the existing stock and rents jump, as they did from 2022. Then the stock catches up. That is a lag, created by the government’s own immigration settings and blamed on builders.

What really rose is not the rent but the price of a house as an asset. The median Sydney house went up 327 per cent while rents went up 187 per cent. The price of a house, measured against the rent it saves its owner, doubled. A government that cannot tell an asset price from a shortage of roofs has no business running housing policy.

My research on 96 quarters of official data shows what a house is. It is an asset. Over the whole quarter century a Sydney house and an Australian share portfolio earned the same after-tax return, once the rent an owner saves is counted. The price of a house relative to its rent falls about 4 per cent within a year for every point on the mortgage rate, and it moves with the share market. There is no bubble, no greed, no conspiracy of boomers. There is a cost of capital.

The arithmetic of an asset price leaves politicians only three handles. A house is worth the rent it saves, capitalised at the after-tax return the same saver could earn elsewhere, less the cost of carrying it. The rent can fall. The return on the competing asset can rise. The cost of carry can rise. Everything else is theatre, which is most of what Canberra has done.

Supply is the first handle, and it works, glacially. A one-per-cent rise in the stock lowers rents about 2.7 per cent, and the price follows. But a year of flat-out building adds under 2 per cent to the stock, and the Housing Accord has proved that governments cannot build to order. They can hold summits. They cannot pour concrete.

The second handle is the one nobody in Canberra has even noticed. The alternative to a house, for an Australian saver, is Australian companies. Make company investment more attractive and the house price must fall to compete. Not a company tax cut, a gift to foreign shareholders who cannot use franking credits. What raises the after-tax return a domestic saver gets from shares is keeping imputation whole, including the refund of credits that Labor tried to abolish in 2019, extending it to savers who still cannot use it, and lightening the capital gains tax on shares. Each raises the return on the asset a house must compete with, and the house price falls. It is the direction the data point, and the one direction no treasurer will take, because it means taxing savers less.

The May budget went the other way. It scrapped the 50-per-cent capital gains discount for inflation indexation, taxing the whole real gain. That is harsher than the discount whenever gains run faster than twice inflation, as they did in the decade to 2007. In a boom it taxes shares harder and makes the untaxed family home more attractive still. A government that set out to make housing cheaper has written a tax law that makes it dearer.

The third handle, the mortgage rate, belongs to the Reserve Bank, which has more to answer for than any treasurer. The price of a Sydney house relative to its rent sat still for ninety years through every rate cycle, then doubled through the Reserve Bank’s years of near-free money and the banks’ years of free credit, and it has given back a fifth of that rise since the rate turned. If inflation now forces the Bank to tighten again, each point on the mortgage rate will take the price of a house relative to its rent down a further 4 to 7 per cent within two years. The Bank does more to house prices in a year than the Housing Accord in a decade.

That leaves the things a government should stop doing. Punishing landlords raises rents and shrinks the rental stock, and the two quarters since the Budget show prices down as well. It helps the buyer with a deposit and charges the tenant without one, which is a strange thing for a government that talks about renters to want. Quarantining rental losses has done worse. Investors have stopped buying, owners will not sell at the lower price, and the market has frozen solid. Restoring negative gearing, the deduction every business enjoys, is the quickest thaw. Grants to first-home buyers do not lower the price either. A cheque to the buyer is a cheque to the seller, laundered through a grateful young couple.

The honest list is short. Build, and do not pretend it will be quick. Use the lending rules, which did more to Sydney prices in 2017 than any tax has. Keep imputation whole and lighten the tax on gains in shares. Restore negative gearing. Leave the rate to the Reserve Bank. Stop paying buyers and punishing landlords. Above all, stop counting roofs. Sydney’s problem is the price of an asset. The people who insist it is a shortage are the people who caused it.