Think tank urges planning reform to boost supply and affordability
Allowing three-storey townhouses and six-storey apartment buildings to be constructed in Australian cities without the need for planning permits is at the heart of a new proposal, which aims to increase housing supply and make homes more affordable.
Think tank Grattan Institute said the plan seeks to streamline approvals for medium-density developments on residential land and near public transport, with the goal of reducing property prices by $100,000 and lower rents by 12% over the next decade.
Report authors Brendan Coates, Joey Moloney and Matthew Bowes contend that these changes, along with nine other recommendations, would help resolve the persistent shortage of homes in areas where demand is highest. “Housing in Australia's major cities is among the least affordable in the world,” they wrote. “Restrictive planning controls add hundreds of thousands of dollars to the cost of new housing in our capital cities.
“For decades, Australia has failed to build enough homes in the places that people most want to live. Now we have a housing affordability crisis that is dividing families and communities and robbing young Australians of their best chance in life.”
The report highlights that existing state and territory planning systems generally default to rejecting new housing, requiring lengthy and complex approval processes. “The key problem is that state and territory land-use planning systems say 'no' to new housing by default, and 'yes' only by exception,” the authors wrote.
The Grattan Institute estimates that its proposed reforms could result in 67,000 additional homes being constructed each year. Over 10 years, this increase in supply is projected to cut rents and property prices, while also supporting economic growth and reducing greenhouse gas emissions through shorter commutes. “Building more homes where people most want to live will make housing cheaper and create wealthier, healthier, and more vibrant cities,” the report states.
The recommendations come as new data from Cotality shows the median price of an Australian home has reached $872,538, with prices rising at their fastest rate in more than two years, despite interest rates remaining at 3.6% since August.
The report also recommends restructuring the Commonwealth’s $3.5 billion incentive scheme for states, suggesting payments be made in instalments and additional funding be provided to support planning reform.
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