It's hard to decide which was more impressive: the case Treasurer Scott Morrison made to the Australian Housing and Urban Research Institute for changing our negative gearing rules, or the contortions he subsequently performed to deny any need for changing negative gearing. 

Having promised that next month's budget will "do something" about housing affordability, Morrison appears to have closed off all federal options beyond an improved funding mechanism for social housing. It's small beer indeed around the barbecue-stopper of housing affordability. 

ScoMo is making a considerable show of "doing something" on housing, billing his AHURI speech as the second in a series, presumably culminating in budget presentation.  

What this second instalment clarified is that it is government policy to keep housing prices rising, for housing investors to make most of their money out of capital gains. He did that while spelling out how increasingly expensive housing is crowding out would-be first home buyers who must then continue to rent, in turn crowding out lower income renters.

In the Treasurer's own words: 

"Higher house prices are making it tougher for potential homebuyers to transition into ownership. Research by CHOICE, the National Association of Tenants' Organisations and National Shelter, reports just over half of renters say they rent because they can't afford to buy their own property.

"Because of this, they are staying in the rental market for longer – a dynamic that puts upward pressure on rental prices and availability and even more pressure on lower-income households, increasing the need for affordable housing.

"These trends were identified in a 2014 AHURI study … It showed a marked lift in renters with higher incomes between 2006 and 2011, supporting the observation that first-home buyers were increasingly staying in the private rental market for longer.

"It is a statement of the obvious that you can't help first homebuyers save for a deposit by implementing policies that increase their rent. Increasing numbers of higher income earners privately renting has the obvious effect of lowering availability of affordable rental stock to those on low incomes."

Quite. It's also a statement of the obvious that you can't help first homebuyers by endorsing ever-higher housing prices. 

"In short we need more housing, not just for homeowners, but for renters, for key workers such as nurses, teachers and police officers who can't afford to rent or buy in the communities they serve and for those on low incomes, the disabled and disadvantaged," concludes the Treasurer.

Absolutely. Which is why restricting negative gearing to new and off-the-plan properties would encourage more supply, while simultaneously easing price pressures on existing housing.

But then the contortions begin. ScoMo would have us believe the beloved nurses, teachers and police officers who can't afford to rent or buy apparently are the same people who are doing most of the negative gearing. 

And there's the implied endorsement of ever-escalating prices, never mind the record levels of debt required for today's purchases. 

"Rental yields for investors are at 2.1 per cent in Melbourne and 1.8 per cent in Sydney. It's less for affordable and social housing stock and hardly comparable to the yields available to institutions and corporates in other investments.

"Notwithstanding these low yields, 27 per cent of Australia's housing stock is owned by investors, with just 5 per cent owned by public housing and community housing agencies. The balance is owner occupied.

"Interestingly, in the UK where they do not have negative gearing, rent as a percentage of income is on average 25 per cent higher [26 per cent of income] than it is in Australia [20 per cent].

"Australian residential property investment is more geared to capital gain than yield."

And ScoMo doesn't want to tamper with that. With a dash of true conservatism, he wants the vast majority of our housing market to keep doing just what it's been doing:

"Regardless of one's opinions of the merits or otherwise of negative gearing, it is an established and structural component of Australia's housing markets. Disrupting negative gearing would not come without a cost, especially to renters, let alone the wider economic impacts. Proponents of disruptive negative gearing changes have ignored this fact."

That's the double-backflip-with-nip-and-tuck – grandfathered changing of negative gearing to have investors concentrate on adding supply while easing some of the competition for existing housing allegedly would come at a cost to renters. 

Or maybe he just meant the "fact" bit was that negative gearing exists. 

The Treasurer seems to be a big fan of the UK system since his study tour there. A fair whack of his speech looks a little like "What I Did On The Holidays". Never mind that housing affordability in London is worse than Sydney or that a whopping 18 per cent of the UK stock is owned by social housing providers thanks to a past of large-scale public housing. 

What comes out of it as a pointer to Budget night is a federal mechanism for funding social housing here, encouraging private sector institutions to pick up federal-backed social housing bonds. 

That should be a welcome initiative, a good thing to help our struggling social housing sector and the overwhelmed public housing. But it won't do anything to ease the political pressures of perceived broader housing affordability problems, never mind increasing household debt.