The federal and state governments are in a bind.

Any policy which causes price reductions will spell financial peril for all those first home owners who purchased in the previous few years.

Yes there are renters out there who want to buy their first home, but any crash in real estate will also hit them hard because it'll cause a downturn in the economy, possibly costing them their jobs and then eating into savings they were hoping to use for a mortgage deposit.

The only solution is to stabilise prices where they are currently by reducing demand. The best way to reduce demand is by reducing immigration to a level where the population doesn't grow, but doesn't decline, so that housing and other infrastructure can catch up.