Industry group says outdated lot size regulations are putting national housing targets at risk
The Housing Industry Association (HIA) has accused state and local governments of constraining new housing supply through planning rules, even as they publicly commit to improving affordability.
The HIA said minimum lot size requirements in planning schemes across Australia are limiting subdivision in established suburbs and making it difficult to reach the National Housing Accord goal of 1.2 million new homes.
The association argued that housing construction is still running well below the 240,000 dwellings a year it says is needed to meet national targets, while land prices have risen to record levels. It said that in many cities, large shares of residential land remain effectively reserved for low-density development, with minimum lot sizes that prevent subdivision.
“Governments are setting housing targets with one hand and shutting down supply with the other,” said Sam Heckel (pictured right), executive director of planning and development at the Housing Industry Association. “You cannot meet housing targets while leaving 1950s planning rules untouched.”
HIA contended that certain planning controls persist due to reluctance to reform suburban planning settings, despite other constraints already affecting subdivision, including stormwater requirements, flood risk, demolition costs, heritage protections and market demand.
“These rules are a political choice, not a technical necessity,” Heckel said. “They were designed for a completely different time, yet governments continue to protect them even as affordability collapses.
“Minimum lot sizes are one of the easiest supply constraints for governments to remove yet remain largely untouched because of political reluctance to reform suburban planning controls.
“Governments keep talking about affordability, but this is where it is being lost.”
According to Heckel, smaller, sensible lot sizes in well-located suburbs can deliver more homes quickly, without high-rise development and without major infrastructure spending.
“Concerns about overdevelopment are being used as an excuse for inaction,” he claimed. “The market already decides where subdivision works and where it doesn’t. What governments are doing is stopping it everywhere, regardless of context.”
HIA also pointed to its modelling, which it said indicates reducing minimum lot sizes from 500 square metres to 300 square metres would lower the land component of a new home by more than $200,000.
“If governments are genuinely serious about housing supply and affordability, minimum lot sizes must go,” Heckel said. “Continuing to defend them means accepting higher prices, lower supply and ongoing failure to meet housing targets.”
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