Many of the nation’s suburbs of single-storey homes will be transformed under a plan from the Productivity Commission to make the property market more affordable, with three-storey upgrades allowed everywhere and high-rise homes to be built near train, tram and bus stations.
Declaring local and regional government planning regulations to be Australia’s main reason for having them some of the most expensive homes in the worldThe commission also wants the minimum lot size for housing to be reduced while allowing more mixed European-style commercial and residential development.
Commission chairwoman Danielle Wood said regulation is the handbrake for new homes, and the time it takes to save has seen deposits rise by nearly 30 percent over the past 20 years.
“When people cannot live close to work or family, the economy and society suffer. We cannot solve our housing affordability problem unless we build more houses where people want to live,” he said.
The commission has been charged by Treasurer Jim Chalmers to investigate the process of approving national construction, land use, access to infrastructure and construction methods.
The government, which in the budget provided 2 billion dollars to states and councils for infrastructure related to housing, is more than 100,000 properties behind his goal to build 1.25 million houses between mid-2024 and mid-2029.
Despite the decline in the national property market since February, house prices are still at unaffordable levels. Average house prices in some cities are still rising, with Perth up 87 per cent since 2020 and Brisbane up 92 per cent.
In its interim report, the commission said state and territory governments should allow three-storey developments on all residential land, except for environmental reasons, special hazards or heritage listings where the conservation benefits outweigh the costs.
Government and council planning schemes would allow apartments of four to nine storeys and above in areas with high demand and existing transport infrastructure, or where it could be rapidly improved.
Minimum lot sizes on new developments should be cut, especially in high-demand designated areas. Commercial areas that actively block residential development should also be modified to facilitate mixed-use areas.
Commissioner Alison Roberts said there are too many regulations that have increased the cost of construction or reduced supply.
“Regulation is important – especially when it ensures buildings are safe and built to a high standard. But often, other laws make it illegal or impossible to build the kind of housing people need in the areas they want to live in,” he said.
“The kind of laws that prevent you from adding a granny flat to your garden or replacing a single house with townhouses are at the heart of our housing challenge.”
The commission said rising housing costs had led to an almost 18 per cent decline in the number of people between 25 and 34 owning a home between 1981 and 2021. Australia’s mortgage debt is among the highest per capita in the developed world.
In order to reduce construction costs, the commission recommends that car parking requirements be reduced or axed altogether, especially in areas where there is evidence that street parking is not used or there are high levels of public transport.
Broad heritage listings would be replaced by more specific safeguards that had undergone a cost-benefit analysis. Instead of blanket heritage protection, individual buildings or small areas would attract heritage listing, with more options for delisting buildings.
A frequent complaint from the housing industry is the introduction of developer contributions for new projects. The Australian Institute of Urban Development estimates developer fees can make up up to 20 per cent of the cost of bringing a new product to market.
The commission found developer contributions should be used where there is a “close connection” between development proposals and local infrastructure needs.
Estimates of developer fees should be made prior to the release or rezoning of land, with proponents given the option of making payments at or later in the development process.
Under the commission’s recommendations, current restrictions in areas such as minimum residential and balcony sizes and room reservation requirements will be axed. Current housing requirements and bedroom size differences between states and districts.
The commission said “state, district and local governments should avoid regulating visible features that do not adversely affect the wider community”.
Restrictions on housing types will also be removed.
Another area of focus for the commission is the time it takes for most jurisdictions to approve resettlement.
Wood said in one case, a developer spent an extra three years on reports and waiting for approval for a 1600-lot development on the Melbourne fringes.
The final report of the commission is expected by March next year.
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Shane Wright is the senior economics writer for The Sydney Morning Herald and The Age.Connect through X or email address.
