Productivity Commission chair Danielle Wood says too much regulation is hurting housing supply. Photo: Region.
Housing regulation in Australia needs a complete shake-up if more homes are going to be built across the country, according to an interim report from a Productivity Commission inquiry.
The newly released report suggests federal, state and territory governments should reform their rules and bureaucratic structures, which it says have become a “handbrake” on new housing supply.
“Australia doesn’t build enough homes in the areas where people want to live. This has made housing unaffordable in many parts of the country,” the report states.
“Increasing housing supply would help put downward pressure on prices and support more people to live in housing that meets their needs.
“Regulation limits housing development, and improving it is a key lever for governments.
“While some regulation is necessary to ensure the safety, quality and liveability of new housing stock, too much or unnecessary regulation constrains housing supply.”
The Commission’s report says regulation can stop certain housing development occurring altogether; and it can deter development due to slow, cumbersome and expensive processes and uncertainty.
The number and interaction of different regulatory requirements can also limit housing construction.
Productivity Commission chair Danielle Wood said Australia’s housing affordability problem is putting housing out of reach for too many people.
It now takes the average household about 11 years to save a 20 per cent deposit on a typical home, up from 8 years in 2005.
“When people can’t live near work or family, the economy and the community suffer,” she said.
“We cannot solve our housing affordability problem unless we build more homes where people want to live.”
The interim report of the inquiry was developed on an accelerated timeframe consistent with the review’s terms of reference.
It does not make recommendations, but instead highlights reform areas the Commission is seeking further input on before making recommendations in its final report early next year.
This interim report, however, sets out four principles for a better housing regulatory system.
They are: adopt a build mindset; regulate only where necessary; coordinate housing with infrastructure; and keep the process simple.
“Regulation is important, but too much or poorly designed regulation can stop new homes being built, make projects slower and more expensive, and reduce the types of housing available to us,” Ms Wood said.
“The rules should allow us to build enough housing in the right places, while still protecting the things Australians value.”
Land-use controls determine where housing can be built, how much can be built, and what form it can take – and present the biggest opportunity for reform.
The report finds that relaxing land use controls is one of the most important things governments can do to boost housing supply.
It says governments should consider broad-based up-zoning in cities.
This would include allowing three-storey development on most residential land, reducing minimum lot sizes, enabling more mixed residential and commercial areas, and allowing more mid-rise and high-rise apartments in high-demand, well-serviced locations.
Fellow commissioner Alison Roberts said housing and infrastructure needed to be planned together.
Poorly coordinated infrastructure can also prevent new housing from being delivered, particularly in greenfield areas where roads, utilities and sewerage connections are often essential before homes can be built.
“Regulation is essential, particularly where it ensures buildings are safe and built to a high standard. But too often, other rules are making it illegal or unviable to build the kinds of homes people need in the places they want to live,” Dr Roberts said.
“The kind of rules that stop you adding a granny flat in your garden or replacing a single home with townhouses are at the core of our housing challenge.
“You cannot build homes without the infrastructure that supports them. Housing plans and infrastructure plans need to work together. When they do not, land that has been rezoned for housing can sit unused for years.”
The report also finds that slow and complex approval processes delay new housing and can make some developments unviable.
Approvals often involve multiple decision-makers across different levels of government, referral agencies and infrastructure providers.
Poor coordination between these bodies can add months or years to projects.
Examples cited include instances of developers trying to navigate overlapping approvals and agencies that were not talking to each other, or having years added to a timeline due to reports and approval processes.
Master Builders Australia has welcomed the report, saying the Productivity Commission’s findings confirm the building and construction industry’s advocacy.
MBA chief executive officer Denita Wawn said the report revealed no surprises for builders.
It reinforces, she said, the need for governments to return to a pro-housing supply agenda.
“The Productivity Commission’s interim findings reinforce what builders already know – excessive regulation, infrastructure bottlenecks and poor housing planning are holding back supply,” Ms Wawn said.
“Master Builders supports the four best practice principles within the interim report and joins the Commission in calling for governments to adopt a ‘build mindset’.
“What Australians need now is action that improves project feasibility, reduces red tape, coordinates infrastructure, unlocks investment and gets more homes built faster.”
Original Article published by Chris Johnson on Region Canberra.
