The data confirms that the ACT government's current land release plan commits 20 per cent of land to houses and 80 per cent to dwellings other than houses.

The Housing Industry Association said in response that this presented an alarming picture for home building in Canberra, and its regional director, Greg Weller, is reported to have said that "it's a deliberate government strategic policy to push more people into higher density". We believe that conclusion is irrefutable.

The Canberra Times report focused on the implications of the fall in approvals on social consequences such as affordability and choice in housing but there is clear evidence that the current land supply policy is also having an adverse impact on the ACT economy.

Investment in dwellings, an important sector of the economy, has traditionally contributed significantly to economic activity in the territory. Data from the ABS shows that from 2011-12 there was a significant drop in investment in dwellings (both houses and apartments). In seasonally adjusted terms, and calculated on the same basis as economic activity is reported in the Budget papers – that is, through the year average – dwelling investment dropped by 5.5 per cent in 2012-13, a further 5.8 per cent in 2013-14 and a further 14.1 per cent in 2014-15. Notably in each of the three preceding years prior to 2012 dwelling investment had increased. By the end of 2015-16, investment was 14.4 per cent less than in 2011-12.

Besides the impact on the economy, the deliberate constraint on the supply of dwelling sites is clearly bound to have social impacts. The Chief Minister's office was reported by The Canberra Times as claiming that the fall in approvals for single detached houses was due to a change in consumer preferences and further that prices had been growing more strongly for units than houses, providing "clear evidence that there is a market for apartments as well as townhouses and single detached dwellings".

Master Builders Association ACT deputy director Michael Hopkins dismissed that explanation. He said, "The change is due to land release policies of the ACT government, not consumer preference."

We believe that conclusion is irrefutable. The obvious question is, therefore, how might the government have determined or measured, as the Chief Minister's office suggests it has, consumer preferences. Obviously the government has not asked everyone who is purchasing a dwelling whether they would prefer to live in a stand-alone house or an apartment, and most certainly, the government could not ask those who are not actively in the market.

There are, however, means that provide objective evidence on what consumers want. The law of supply and demand, usually covered in elementary economics, clearly shows whether consumers' demand has been met. The law of supply and demand is quite brutal – if the supply of a product in the market is less than the demand, the price goes up, and conversely, if the supply exceeds demand, the price goes down.

Between the June quarter 2012 and June quarter 2016, the median price of stand-alone houses in the ACT increased by approximately 29 per cent. Over this four-year period, the median price of attached dwellings (units and townhouses) increased by a mere 3.2 per cent. The price of attached dwellings has decreased in real terms. The data from the ABS contradicts the claim that the fall in approvals (driven of course by constrained supply) of detached housing reflects consumer preferences.

The government might assert it has based its claim on the comparison of the number of transfers for stand-alone houses and units respectively. Over the same period (June 2012 to June 2016), the number of transfers for stand-alone houses dropped by 3 per cent and the transfers of units and townhouses increased by 2.1 per cent.

However, it would be a mistake to interpret the drop in the transfers of established stand-alone houses as reflective of change in consumer preferences. It is in fact a reflection of the inadequate supply of land which has resulted in a 29 per cent increase in median house prices, thereby forcing people to resort to purchasing apartments, which as the data suggests, were in abundant supply, or buying a house across the border where land remains available at affordable prices.

The question that must be answered is why the government has adopted such a shift in policy when it has both an adverse impact on the economy and does not provide the choice required to meet the housing needs of people, most importantly first-home buyers and young families. More fundamentally, the discrepancy between the government's claims and the facts raise questions of trust in the government.

For the Canberra community, the increase in house prices and a lack of appropriate dwellings to meet its needs is not the only concern. The ABS data also shows that between 2011-12 and 2015-16, ownership transfer costs increased by more than 14 per cent. Transfer costs are fees involved in the sale of property, including fees paid to lawyers, stamp duty and other government charges and real-estate agent fees. This again is inconsistent with the government's claims regarding the impact of its taxation reform on housing affordability.

It should be pointed out that we support taxation reform. Indeed, the review into the ACT's taxation system was commissioned under a Stanhope government in 2010 by then treasurer Katy Gallagher. Following that, as chief minister, Ms Gallagher showed real leadership in committing her government in 2012 to a nation leading reform, that no other state or territory has embarked on. However, any reform, and indeed taxation reform, needs to be supported by complementary and coherent policies. Otherwise, reform not only fails to achieve its objectives and outcomes, but can be counterproductive.

At the very least, if the objective of stamp duty reform (that is, its transfer to general rates) was to improve affordability of entry into housing, as oft claimed by the Chief Minister, including during the recent elections, the government has failed in achieving that objective. Canberra households are currently paying more for a median priced house than they were before the taxation reform commenced, despite the reductions in stamp duty.

The fact is that while the increase in rates is designed to balance the loss of stamp duty revenue, the government has designed a land release strategy that has so constrained the supply of land for housing that the reduction in stamp duty is more than negated by the increase in the cost of land and housing. The rapid escalation in house prices during the transition period has also pushed an ever increasing number of houses into a higher stamp duty bracket. The government might rightly be accused of double dipping. And the rates must, like the grim reaper, still be paid.

Jon Stanhope, a former ACT chief minister, is a professorial fellow at the Institute of Governance and Policy Analysis, University of Canberra.

Khalid Ahmed was executive director, policy coordination and development division, ACT Treasury. He is adjunct professor at the Institute and works in the private sector.