China's capital-account adjustment, which has entailed potentially the largest single outflow of capital the world has ever seen, has exacerbated this shift.
Lastly, conventional monetary policy in a range of countries has been narrowly focused on CPI targeting, with financial stability often only considered in a supervisory or liquidity context.
The impact of these key influences is likely to have been exacerbated by a range of policy issues indigenous to Australia: issues around quality of city infrastructure, concessional tax treatment for a geared asset, episodic support for public housing, and rental conditions which seem to favour the landlord when compared with other countries.
Given the breadth of the issues involved, the far-reaching impact of getting it right – and hence the risks around getting it wrong – it is not surprising much creative effort seems to be going into finding policies which are perceived to affect few people. And cost little.
This approach risks covering symptoms rather than addressing causes and potentially even escalating imbalances.
Consider supply, which must be a part of any sustainable solution. Adding supply to a market with some speculative involvement isn't certain to reduce prices in the short term.
Additional supply can simply feed the speculative forces which already exist and exacerbate the risk of a boom-bust cycle.
Similarly, policies which make it easier for people to 'get into the market' might bring some short term improvement but would seem to be ultimately counterproductive if prices are already too high relative to incomes.
For many inflation targeting regimes, financial stability considerations are viewed as largely separate to interest rate decisions.
With household debt having increased relatively consistently since the adoption of inflation targeting in the early 1990s there may need to be a more formal shift towards policy targets which recognise the financial risks which pure inflation targeting can create, even if this comes at a cost to top line GDP growth.
At the end of the day, easier monetary policy favours debtors over savers. First-home buyers are savers in a relatively pure sense of the concept.
With this range of deep and varied drivers, the policy response must be similarly broad.
As well as a greater role for debt levels in monetary policy considerations, we advocate a range of policies.
These include stronger restrictions on non-resident buyers – rather than just tax surcharges which overseas experience suggests are very difficult to calibrate and which gear state government finances even more towards housing - including dwelling availability as a consideration for immigration policy.
It also induces tax reform to reduce the upfront cost of dwellings (which also inhibits turnover) and redresses the imbalance towards investors. There also needs to be a concrete effort to improve the efficiency of land usage.
A policy response which over-focuses on narrow financial levers and not sufficiently on the institutional or broader environmental drivers risks exacerbating rather than reducing stability concerns.
The right policies will help rebalance the housing market in a sustainable way, not just over an electoral or economic cycle - and in a way which addresses the emerging division between those are in the lane of home ownership and those who feel they will always be stuck elsewhere.