The opposition is betting on detached homes in outer suburbs as the election fight over housing policies shapes up

Coalition strategists say Peter Dutton will escalate the fight against Labor over the nation’s housing crisis by focusing on the preferences of politically volatile middle and outer suburban voters.

They say his campaign will also seek to strike a sharp contrast against federal government plans for more social and higher-density housing in the nation’s most expensive cities.

While experts believe the ultimate solution may be a combination of both approaches, voters are increasingly likely to face a choice.

Following consultation with developers and local government, the opposition on Saturday revealed one of its first major policy positions ahead of the next election.

A $5 billion fund will be established to help investors and councils clear water, electricity and sewerage bottlenecks.

The opposition is betting that the government’s focus on state-built public housing is less attractive to voters in the “urban and peri-urban” swing electorates that look set to be at the heart of the coming federal election campaign.

Shadow housing spokesman Michael Sukkar said on Monday that the Coalition’s proposed funding would not exclude infill housing projects.

However, he confirmed a strong preference for investing infrastructure dollars in new areas.

“Ultimately, the equation here will be how many dollars do you need for the infrastructure, whatever it might be, and how many homes are yielded from that spend,” he told ABC Radio National.

“If you have an urban infill [project] that can deliver a huge output of housing for an infrastructure request or proposal, it’s not precluded.

“But our expectation, with the hundreds of councils we’ve met with over the last couple of years, is that the greatest opportunities are now greenfield sites in detached housing.”

The difference between the two parties

The Coalition says it will provide funding to councils and other entities to solve specific regional bottlenecks, potentially unlocking around 500,000 homes with an average policy cost of about $10,000 apiece.

Labor has attacked the policy as a “card trick” that copies a smaller $1.5 billion infrastructure-enabling policy of its own.

The government is also sticking to a national cabinet deal with states and territories to generate 1.2 million new dwellings, despite warnings the goal is too ambitious and delays payments until the homes are delivered, in some cases years from now.

“The good news is that both sides of politics are prioritising tackling supply as being the solution,” Grattan Institute housing expert Brendan Coates said.

“The biggest difference is the Coalition’s money is more up-front and it’s not on the basis of outcomes.

“Labor’s money is on the basis of outcomes and those outcomes look pretty uncertain and you don’t get the money for five years.”

There are also political differences between the two sides on the types of homes that are likely to be built — and who would ultimately own them.

Labor strategists argue that its focus is on things like the government’s $10 billion Housing Australian Future Fund (HAFF), which seeks to increase social and affordable housing.

That’s something the Coalition believes undercuts the aspiration of most Australians to own their own home.

“Politically most people don’t want to be in social housing,” Shadow Treasurer Angus Taylor told the ABC.

And while Mr Taylor said there will always be an important need for public housing, the primary focus should be on ensuring families end up owning their own homes.

Another driver for the Coalition’s policy is the notion that voters are less likely to be seduced by “demand side” policies such as buyers’ grants and other sweeteners that can often end up benefiting sellers by driving up prices.

“We think the politics of the supply side matters now,” Mr Taylor said.

Experts weigh in on the policies

Peter Tulip, chief economist at the Centre for Independent Studies, said the Coalition’s policy “is better and will deliver more housing”.

“The HAFF is 30,000 dwellings for a $10 billion spend, so that’s something like $300,000 a dwelling, which is what constructing a new dwelling costs outside the big cities,” said Mr Tulip, a former Reserve Bank of Australia economist.

“The Coalition’s policy instead is to provide enabling infrastructure.

“There are lots of housing developments around the country that are stalled because the water and sewerage won’t be turned on, or it’s the roads or other forms of transport, electricity or utilities that aren’t ready.

“And that requires a relatively small spend to unlock large areas of housing.”

Mr Coates said the Coalition plan “is a positive step”, but he cautioned the devil will be in the detail.

“The challenge with those kinds of infrastructure grants is often in the definition of what counts as infrastructure.

“And it’s also not clear how much the Coalition will pay for things that developers would otherwise pay and may already be planning to spend.

“How much Coalition cash displaces what developers or councils would have done?”

Mr Coates said he expects the number of homes the plan would unlock is likely to be “quite a lot” lower than 500,000.

Despite its outer city preferences, the Coalition’s policy will be just as useful for inner city projects, Mr Tulip said.

“It is true that you can do the greenfields quicker and without the zoning YIMBY-versus-NIMBY complications.

“But my view is that if you want a serious solution, you need infill in the inner suburbs. That’s where the huge demand is for extra housing, for understandable reasons. A house two hours west of Sydney is a relatively poor substitute for the housing people want.”

The Coalition’s housing policy announcement comes after Treasurer Jim Chalmers last week gave his strongest indication yet that the federal government is not planning to bring in changes to negative gearing.

And it follows a coordinated push by teal independents urging Labor to rethink its “unrealistic” plan to build 1.2 million homes, echoing criticism by Mr Sukkar who said last week there was “no way the government will get anywhere near” that target.

Instead, the focus by independents like Allegra Spender is on funding that goes to states that loosen their zoning laws and boost home approvals rather than home completions.

“The carrot isn’t working when it’s tied to a target that most people think is not achievable, and that money isn’t paid unless the goal is achieved in five years when the costs are up-front,” she said.