The Unspoken alternatives to expensive housing report, published on Monday, said current policies, such as first-home-buyer grants or rezoning, only reduced the cost of housing by 5 to 10 per cent.

Whereas innovative programs, such as land rent schemes or community land trusts, could immediately reduce the cost of housing by up to 50 per cent, the Australia Institute report said.

Housing affordability and property prices sky-rocketing off the back of a recent boom have been a growing concern nationwide.

Earlier this year, an international study rated Australia as the third-least affordable country for housing.

Sydney ranked second and Melbourne fifth in a list of the world's least-affordable major housing markets.

Canberra placed 51th for affordability, however, the capital's median house prices are near record highs.

To purchase a home, house hunters needed to spend 12.9 times the median annual household income to buy in Sydney, and 9.9 times their income to live in Melbourne.

However, housing affordability Australia-wide could be improved through the introduction of land rent schemes or community land trusts, report author and Australia Institute economist Dr Cameron Murray said.

Dr Murray said the ACT’s land rent scheme set a national example for innovation, and, if applied across the country, could significantly reduce the cost of secure long-term housing.

The ACT's Land Rent Scheme is a publicly-run housing system that gives low-to-moderate income households the option of renting land through a land rent lease rather than purchasing the land to build a home.

The report said people could save 37 per cent on housing costs over 10 years, compared with renting.

Since its introduction in 2008, more than 3200 households in the ACT have signed up, saving a reported $69 million in housing costs.

The report said the ACT government made $9.2 million in land rent revenue last year, however, the net financial effect had been revenue neutral due to forgone land sales.

"State governments, councils, or even the federal government, could start their own land rent schemes at no financial cost by either acting as a land developer or by purchasing new housing from the private market," the report said.

Dr Murray said the establishment of land rent schemes or community land trusts should be a priority for government, rather than the privatisation of government land for housing development.

"Public land rent schemes that provide discounted land access to owners, and private community land trusts, are proven ways to ensure that subsidies reduce costs for homeowners," Dr Murray said.

Dr Murray likened the reliance on private property markets to deliver affordable housing to "relying on the fox to watch the hens".

"Private property markets that provide access to land and housing through competitive pricing are the problem, not the solution, when it comes to providing cheaper housing options.

"If we were serious about making secure housing cheaper we wouldn’t be talking about first home buyer grants or rezoning in an attempt to increase supply."

Dr Murray said the standard policy ideas only reduced housing costs by only 5 to 10 per cent.

"We should instead be enacting policies that can immediately reduce the cost of housing by half."