That an entire generation of young Australians has been shut out of the Melbourne and Sydney property markets is bad enough. When you consider though that a solution to the problem of housing affordability is staring policy-makers straight in the face, it is a blatant failure of government.

No, it's not negative gearing we are talking about here – although getting rid of negative gearing would help to rein in the budget deficit.

The increase in home values in Melbourne in June was the highest of any capital city, according to RP Data. Credit:Glenn Hunt

We are talking about anti-money laundering (AML) legislation. All the government has to do is to bring in the AML legislation it said it would bring in almost 10 years ago and the heat, or at least some of the heat, would come out of the market.

At present, Chinese investors are only permitted to take $US50,000 ($65,413) out of the country. Yet they are regularly paying cash for $1.5 million-plus homes in Sydney and Melbourne.