The Business Council of Australia wants local governments to be stripped of decision-making powers if they fail to meet “basic timeliness requirements” when processing development applications.
The Victorian government is already heading in this direction. It intends to override council planning to fast-track apartment blocks around transport hubs in established suburbs.
There’s a widespread view that local government shoulders responsibility for our housing shortfall because proscriptive regulations enable well-heeled objectors to block or delay projects. Bolder council action on housing would certainly be welcome. But the matter is more complex than a simple nimby-yimby divide would suggest.
Five years ago, Australia was building homes at a rapid clip. More than 215,000 dwellings were completed nationwide in 2018-19 and more than 1m homes in the five years before that, matching the target set in the 2022 housing accord struck by national cabinet soon after the Albanese government took office. If we’d kept building at that pace, we’d get within spitting distance of the accord’s revised target of 1.2m homes by 2029. Now, though, we’re miles away. Last financial year fewer than 175,000 new homes were completed.
It wasn’t “red tape” and local government delays that caused the slowdown in residential construction but changed business conditions.
Covid was followed by supply chain bottlenecks, rising material costs and shortages of skilled labour. Higher interest rates increased the cost of borrowing for developers and made potential buyers wary of buying off the plan. This has a big impact on larger apartment projects, because most developers need to pre-sell 60% to 70% of units to secure finance before they can build. Overseas buyers are an important part of this market, and in 2017 the Coalition government made it harder to get the numbers to stack up by imposing a 50% cap on foreign ownership in new multi-storey buildings with 50 or more apartments. State governments also hit foreign investors with extra fees, including stamp duty surcharges.
Construction will increase if business conditions improve, though that may go hand in hand with rising property prices, which is hardly good news for affordability. The boom-bust cycle that characterises residential development is one reason why more public investment in social housing is so crucial. Apart from providing homes for Australians whose needs aren’t met by the market, public investment helps maintain overall housing supply in a downturn.
Even with greater public investment, planning has a big role to play in helping the private sector to accommodate a growing population – just not in a way that it’s usually understood.
The holy grail of urban consolidation in established suburbs is a shift from free-standing dwellings to European-style, medium-rise apartments that can accommodate many more people while still providing greenery and open spaces. This is the so-called “missing middle”, a much-needed alternative to the high-rise residential towers creating wind tunnels in city centres and the steady march of detached housing rolling over farmlands on the urban fringes.
Yet high-quality urban infill is easier said than done. A significant challenge lies in the fragmented pattern of land ownership that was put in place as our cities grew. A single suburban lot is generally too small to accommodate mid-rise housing built around courtyards or shared gardens. If we are going to meet our housing aspirations, we need to overcome the fragmented pattern of land ownership established in postwar subdivisions. This means a bigger government role to create incentives for blocks to be amalgamated to a scale to allow precinct-level redevelopment.
Detached houses on separate blocks provide plenty of benefits. Back yards provide space for leisure; gardens absorb rainfall, reducing runoff and flood risks and mature trees cool the landscape. But much of our postwar housing stock is no longer fit for purpose. It was built without thought for energy efficiency or the impact of the climate crisis, and intended for larger households than today. Many houses are now underutilised. At the 2021 census more than 1.2m homes had three or more bedrooms “in excess of need”.
Under current settings, these family homes are being demolished one by one. Some make way for two, three or more townhouses squeezed on to a single parcel of land; others are replaced by McMansions. Sometimes the original house is retained but a granny flat added or the block subdivided in a battle-axe arrangement to fit another dwelling.
Such piecemeal redevelopment brings a modest increase in density but with the loss of the very things that make suburban life attractive. Trees are cut down and open space disappears as gardens give way to concrete and brick. The ad hoc nature of this redevelopment also makes it harder for local and state governments to ensure services and infrastructure can keep pace with population growth.
We are at risk of getting the worst of all worlds. More high-rise towers in the centre and around train stations and more urban sprawl on the fringes, combined with the loss of amenity in established suburbs as existing houses are gradually replaced by piecemeal redevelopment. We need a strategic approach to facilitate well-designed medium rise development at a scale that accommodates more people, creates shared open space and preserves greenery. We need more sophisticated planning, not less.
• Peter Mares is a fellow at the Centre for Policy Development and the author of No Place Like Home: Repairing Australia’s Housing Crisis
