In a recently released report, the Grattan Institute has recommended that three-storey townhouses and apartments should be permitted on all residential-zoned land in all capital cities, and that housing developments of six storeys or more should be allowed as-of-right near major transit hubs and commercial centres.
According to a communique from the Grattan Institute, the report, titled More homes, better cities: Letting more people live where they want, argues for these changes as part of "a concerted policy assault on Australia's housing crisis."
The report found that housing in Australia's capital cities is among the least affordable in the world as a result of "restrictive" planning controls limiting supply. According to the media communique, about 80 percent of all residential land within 30 kilometres of Sydney's centre, and 87 percent in Melbourne, is zoned for housing of three storeys or fewer, and three quarters or more of residential land in Brisbane, Perth and Adelaide is zoned for two storeys or fewer.
The Grattan Institute's media release states, "We have a housing affordability crisis that is dividing families and communities and robbing young Australians of their best chance in life. The key problem is that state and territory land-use planning systems say 'no' to new housing by default, and 'yes' only by exception."
"Allowing more housing in established suburbs would mean cheaper housing in all suburbs," the release reads.
According to modelling from the Grattan Institute, the proposed reforms could enable the construction of 67,000 new homes across Australia every year, which, over the course of a decade, would cut rents by 12 percent and reduce the cost of a median-priced home by $100,000.
The Planning Institute of Australia (PIA) has responded to the report with concern, noting in a communique that while the country needs more well-located homes and faster approvals, "the Grattan Institute's proposal for blanket upzoning is the wrong tool for the job, [as] it risks more congestion, stretched services and less liveable cities."
"Simply rezoning more land won't deliver more homes if the construction industry can't build them and if the infrastructure isn't in place," PIA CEO Matt Collins said. "Simpler processes and better planning systems are essential, but weakening planning just adds pressure to infrastructure, increases congestion, and makes communities worse off."
The PIA supports greater housing density in well-located areas, but argues that sequenced planning is key to directing growth to areas with capacity to support it, making housing delivery sustainable, more efficient and cost-effective for both developers and government.
"If we upzone everywhere, we create infrastructure pressures everywhere," the PIA's release reads. "Governments can't upgrade roads, schools and pipes in every suburb all at once. Communities will wait longer for the services that make neighbourhoods liveable."
Collins cautioned that, in his opinion, "the real challenge to housing production is the construction sector's ability to deliver."
"Our construction sector is stretched and builders are struggling to deliver existing approvals, with labour shortages, material delays and cost pressures," he said. "Adding another 67,000 homes a year on top of that isn't realistic without serious investment in workforce, supply chains and infrastructure coordination."
According to the PIA, close to 100,000 lots in Queensland held active planning approvals but had not been developed as of December 2024. In Victoria, the number of undeveloped approved dwellings, including houses, townhouses and units, was just shy of 120,000 in 2023.
"Good planning enables more housing and creates predictability, transparency and confidence for the community, developers and governments alike. The Grattan Institute's approach risks doing the opposite," Collins said.
The Grattan Institute's report can be accessed online.
