A new report suggests an overlooked solution to housing crisis could unlock a million new homes in Australia’s major cities. The proposal centers around increasing density in the middle rings of Sydney, Melbourne, Brisbane, Adelaide, and Perth, potentially boosting the nation’s housing stock by 9 percent. This involves developing more terraces, townhouses, low-rise apartments, and dual occupancy dwellings in areas already equipped with essential services and infrastructure.
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Background Context
The Committee for Economic Development of Australia (CEDA) and urban consultancy firm Urbis collaborated on the report, which highlights the untapped potential of “gentle density.” The report argues that current discussions around housing supply are too focused on high-density inner-city developments or sprawling outer suburban projects, neglecting the potential of medium-density housing. Senior economist and report co-author Danika Adams stated that the overlooked solution to housing crisis could unlock a million homes and address the decades-long housing shortage by providing more housing options in desirable middle-ring neighborhoods, while also leveraging existing infrastructure.
Australia faces the challenge of building 240,000 homes annually to meet the National Housing Accord target of 1.2 million well-located homes by 2029. However, the nation has consistently fallen short of this goal since 2016. With a projected population increase of over 14 million people in the next 40 years, predominantly in major cities, the pressure on housing is expected to intensify. Despite this growth, Australian cities remain relatively low-density compared to global counterparts. Melbourne, for instance, ranks 100th in population but 858th in density, while Sydney ranks 104th in population and 803rd in density.
Potential Impact of Moderate Density
The CEDA report estimates that a moderate-density approach could significantly increase housing stock in major cities. Sydney could see a 12 percent increase in homes, Melbourne a 15 percent increase, Brisbane and Adelaide a 16 percent increase each, and Perth a more than 17 percent increase. According to the report, if just one in four standalone dwellings in major cities were developed into dual occupancies, the overlooked solution to housing crisis could unlock a million new homes. This gentle density includes terraces, townhouses, low-rise apartments and dual occupancy in well-located and serviced areas.
CEDA chief economist Cassandra Winzar emphasized the need to move beyond building further and further out, citing the strain on infrastructure, the need for new transport systems, and the resulting long commutes and difficulties in accessing services. She argued that middle-ring suburbs and gentle density offer the best of both worlds. Some states have already initiated reforms to streamline approvals and unlock development in well-located areas, though these efforts have faced criticism from some residents. Western Australia, for example, has announced plans to increase density around 10 train stations in Perth. The overlooked solution to housing crisis could unlock a million homes and help meet the growing demand for housing in major cities.
Lessons from Auckland’s Housing Reforms
The report also examined the impact of broad planning reform in Auckland, New Zealand, which introduced sweeping “upzoning” changes from 2016. These reforms abolished single-family zoning and allowed medium-density housing across approximately three-quarters of the city. Between 2016 and 2021, these changes resulted in around 22,000 new homes, accounting for one-third of all residential building consents and driving a 50 percent increase in approvals. By 2024, Auckland’s housing stock had grown by around 80,000 dwellings – about 15 percent – outpacing population growth for the first time in decades.
The Auckland experience demonstrates the potential of large-scale planning reform. The report found that house prices in Auckland were 15 to 27 percent lower than they otherwise would have been, while rental prices were reduced by up to 28 percent. Danika Adams highlighted that Auckland’s success stemmed from removing complex processes, allowing feasible development, and applying the reforms broadly. Implementing similar planning reforms in Australia, along with embracing gentle density, could prove to be an overlooked solution to housing crisis could unlock a million new homes and alleviate housing affordability issues.
Challenges and Considerations
While the report presents a compelling case for increasing density in middle-ring suburbs, there are potential challenges and considerations to address. One key concern is ensuring that new developments are well-integrated into existing communities and do not negatively impact local amenities and infrastructure. Careful planning and community engagement are essential to mitigate potential opposition from residents who may be concerned about changes to their neighborhoods. The overlooked solution to housing crisis could unlock a million new homes, but needs to be implemented carefully.
Another challenge is streamlining the approval process for medium-density housing projects. Complex and lengthy approval processes can deter developers and increase costs, hindering the implementation of gentle density initiatives. Governments need to work to simplify regulations and provide clear guidelines for developers to encourage investment in medium-density housing. Overcoming these challenges and implementing effective planning reforms are crucial to realizing the potential of an overlooked solution to housing crisis could unlock a million new homes and addressing Australia’s housing shortage.
In conclusion, the CEDA report underscores the significant potential of increasing density in the middle rings of Australia’s major cities. By embracing gentle density and implementing effective planning reforms, the overlooked solution to housing crisis could unlock a million new homes, alleviate housing affordability issues, and create more sustainable and livable communities. The Auckland experience provides valuable lessons on the benefits of large-scale planning reform. Addressing the challenges and implementing these recommendations are vital steps towards resolving Australia’s housing crisis and ensuring a more secure future for all Australians.
Note: Information based on credible sources and industry analysis.
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