Homes could be $100,000 cheaper over a decade if Australia’s capital cities dramatically overhaul their zoning rules to allow three-storey townhouses and apartments to be built on all residential land, according to a new report from the Grattan Institute.
Calling for an end to the “age of nimby-ism” and “a housing policy revolution”, the independent thinktank said Australians were keen to embrace apartment and townhouse living, especially if it meant access to more affordable and well-situated homes.
Brendan Coates, the director of the Grattan Institute’s housing and economic security program, said it was time Australians accepted that our biggest cities must be more densely populated if we hope to deliver the number of homes people, particularly younger generations, need.
“For decades, Australia has failed to build enough homes in the places that people most want to live,” Coates said.
“Now we have a housing affordability crisis that is dividing families and communities and robbing young Australians of their best chance in life.”
As part of a “concerted policy assault on the housing crisis”, Grattan’s report said easing zoning restrictions to allow three-storey townhouses and apartments across all residential land would unlock more than 1m homes in Sydney alone.
The report, co-authored by Coates, Joey Moloney and Matthew Bowes, pointed to “a large body of evidence” showing that “when planning controls are relaxed, the result is more and cheaper housing” – most notably in Auckland, New Zealand.
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Grattan’s modelling suggested its proposed reforms could lift housing construction across Australia by up to 67,000 homes a year, against 174,300 dwellings built in the year to June, according to the Australian Bureau of Statistics.
Over a decade, the boost to supply could push rents 12% lower than would otherwise be the case, and slice more than $100,000 off the cost of the median-priced home – and by much more in the longer term, the report said.
Leaders in New South Wales and Victoria are working hard to get rid of rules that restrict the building of multi-unit dwellings in suburbs within striking distance of the city centre and next to transport hubs.
Still, Grattan calculated that about 80% of residential land within 30km of Sydney’s city centre is restricted to housing of three storeys or fewer, while 87% of all Melbourne’s residential land is restricted to housing of three storeys or fewer.
Three-quarters or more of residential land in Brisbane, Perth and Adelaide is zoned for two storeys or fewer, the report said.
As a result, Australia has some of the least densely populated cities in the world.
If the inner 15km of Sydney offered the same number of homes as Toronto – a city that ranks similarly on quality-of-life measures – it would mean an extra 250,000 well-located homes.
Similarly, if the inner 15km of Melbourne were as dense as Los Angeles, it would have 431,000 extra homes in striking distance of the CBD.
Michael Fotheringham, the managing director of the Australian Housing and Urban Research Institute, said: “Australia should aim to get off the bottom of the table in urban density.
“There’s a clear economic argument we should be improving density,” he said, not least that better located and more affordable homes would support essential workers such as nurses.
Fotheringham pointed to reforms by the Victorian premier, Jacinta Allan, who recently announced the biggest planning overhaul in a decade targeting “old-fashioned nimby-type laws”.
Those changes notably curbed the right to object to new building projects, Fotheringham said.
“People who are concerned about increasing density worry about what that looks like in their suburb. But I don’t buy that, because the fancy new apartments and townhouses tend to be higher amenity than the older, rundown housing that it’s replacing.”
But Coates argued that the changes being implemented across cities like Sydney and Melbourne, while welcome, did not go far enough.
The Grattan report said that land around transport hubs in major cities should be “upzoned” for higher-density living of at least six storeys, while heritage protections “that apply to much inner-city land” should be reviewed.
Coates said a key issue in Sydney – which he dubbed “ground zero” for the national housing crisis – was that NSW’s planning system said “no” by default.
To that end, the report also recommends that planning application processes should be streamlined so that developments of up to three storeys and which “meet clear standards” should not require a permit. Larger developments that also meet pre-set standards should be assessed along “deemed-to-comply” pathways.
