Three-storey townhouses and apartments should be permitted on all residential land in all capital cities as part of a concerted policy assault on the housing crisis, says a new Grattan Institute report.
Housing developments of six storeys or more should be allowed as-of-right around major transit hubs and key commercial centres.
The report, More homes, better cities: Letting more people live where they want, finds that housing in Australia's major cities is among the least affordable in the world.
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,' says report lead author and Grattan Institute Housing Program Director, Brendan Coates.
'Now 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.'
About 80 per cent of all residential land within 30km of the centre of Sydney, and 87 per cent 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 upshot is that our capital cities are among the least dense of their size in the world.
Allowing more housing in established suburbs would mean cheaper housing in all suburbs.
It would boost Australians' incomes and quality of life, by letting more people live closer to high-paying jobs as well as transport, schools, and other amenities.
And it would mean shorter daily commutes and hence lower greenhouse-gas emissions.
Developments of up to three storeys that meet clear standards should not need a planning permit. Larger developments that meet pre-set criteria should be assessed via 'deemed-to-comply' approval pathways.
Allowing three-storey townhouses and apartments on all residential land in capital cities would unlock commercially feasible capacity for more than one million new homes in Sydney alone.
Grattan Institute modelling shows that these reforms could lift housing construction across Australia by up to 67,000 homes a year, which over a decade could cut rents by 12 per cent and slice more than $100,000 off the cost of the median-priced home, and by much more in the longer term.
'Australia needs a housing policy revolution,' says Mr Coates.
'The equation is simple: If we build more homes where people most want to live, housing will be cheaper and our cities will be wealthier, healthier, and more vibrant.'
