It's two weeks from the federal budget, and the Government is under pressure to come up with a strategy to put the brakes on rising house prices.

In some parts of the country, house prices have risen by nearly 20 per cent.

The Coalition has long argued that if more housing supply comes on to the market, record prices rises could be dampened:

"Housing affordability has been a key focus of my government right from the outset, and the most important change that we need is more supply." - Prime Minister Malcolm Turnbull, March 6, 2017.

"Our response must first strive to remove obstacles that restrict supply responding to genuine demand." - Treasurer Scott Morrison, April 10, 2017.

But there are different views on whether increased supply will help make housing more affordable, or if it will instead fuel more investment into an already overheated housing market.

'It doesn't matter how much you build'

Lindsay David, of LF Economics, has conducted a state-by-state analysis of housing supply and found that in Sydney and Melbourne, properties are being built at a faster rate than population growth.

He argues that if there really was a housing supply shortage, rents would also be skyrocketing, like they did in mining towns during the minerals boom.

Mr David thinks that the property market is being fuelled by speculative investors, and that additional supply will only encourage more people to put their savings into the market, which will push prices higher.

"When you're in the pit of an irrational exuberance it doesn't matter how many new dwellings you build," he said.

"You are always going to find a whole lot more buyers than there are available dwellings."

Undersupply sees property developers playing 'catch-up'

The property development sector believes that more housing supply could help get "housing affordability under control".

Chris Mountford of the Property Institute of Australia says that the new stock that is coming onto the market is to compensate for years of insufficient supply.

"I think what we've historically seen is significant undersupplies in a lot of our major cities," he told 7.30.

"So we're actually playing catch-up at the moment."

Mr Mountford says that increased supply won't significantly lower the rate of house price growth. But he says they'll rise a lot more if new housing isn't made available.

"What we're likely to see is a moderating in price to come if we get the supply side of the equation right," he said.

"If we don't bring supply online that demand is going to continue to come anyway, and that demand will drive an increase in price over time."

Record construction, prices

Supply is only one side of the house price story, and Hal Pawson, Professor of Housing Research Policy at the University of NSW, says it is important to look at demand to try to moderate spiralling house prices.

He says that high levels of investment and tax incentives like negative gearing are pumping up demand.

"You really have to look at the demand side of the equation as well, and there are a whole raft of current policy settings which are inflating that demand. And we need to be dampening that down," he told 7.30.

He says the high levels of new housing in parts of the country has not reined in demand.

"We've had a sort of natural experiment in New South Wales and in Sydney over the last four or five years."

"We've actually seen record amounts of new construction, and where have house prices been going? Exactly in the same direction.

"It's a positive correlation."

Should Commonwealth land be released for housing supply?

The Government is a significant landholder, with departments and agencies such as Defence owning millions of hectares around the country.

There have long been calls for some of that land to be rezoned for housing, and the lead-up to this year's budget is no different.

The Property Institute's Chris Mountford says that Government should critically evaluate whether they need to hold onto their land.

"I think that Governments at all levels should really be looking at their landholdings and see if they've got surplus of land that could be put to better use," he said.

"A big part of that would be looking at land that might be suitable for housing developments."

According to Hal Pawson, releasing some Government-owned land could be a useful policy, but it's unlikely to make much of a difference overall to housing affordability.

"A lot of the land that is held by Defence and other federal agencies isn't very well located, I think, for housing development, certainly not for affordable housing development, which really needs to be in places where there is very good public transport and connectivity."