Australia is facing a severe housing shortage, and a leading business group, the Business Council of Australia (BCA), is urging state governments and city councils to adopt high-density housing options and zoning reforms to tackle the crisis. The BCA highlights the New Zealand city of Auckland as a successful model for addressing housing supply issues through zoning changes.
In its latest report, the BCA emphasizes that zoning reform can dramatically increase housing supply, citing Auckland’s 2016 rezoning of three-quarters of its residential land as a key example. According to BCA chief executive Bran Black, this move led to a significant boost in home building and long-term housing affordability. “Auckland’s rezoning has resulted in rents being at least 26% lower than they would have been without the change, and long-term dwelling prices have stabilized,” Black noted.
With skyrocketing housing costs in cities like Sydney and Melbourne, where the median house prices are approximately $1.47 million and $925,000 respectively, the BCA stresses that urgent action is needed. The organization recommends prioritizing medium- and high-density housing developments around transportation hubs and service centers, such as the newly opened Sydney Metro stations. These changes, Black added, need to balance greater density and height with the preservation of green spaces and local heritage.
The Australian housing market has become a major political and social issue, as many Australians are now priced out of owning homes due to rising demand and limited supply. Despite the federal government’s target of 1.2 million new dwellings under the National Housing Accord over the next five years, industry experts, including the Master Builders Association (MBA), warn that the goal may be slipping out of reach due to rising costs and labor shortages.
Recent data from the Australian Bureau of Statistics (ABS) for the 2023-24 financial year shows that about 176,000 new homes were completed, falling 64,000 short of the annual target required to meet the federal goal. The BCA and MBA point out that persistent cost pressures in the building industry are undermining progress. Alex Waldren, MBA national director for industrial policy, told a Senate committee that “cost escalation is occurring in social housing projects and becoming more prevalent across the country.”
In addition to calling for higher-density housing, the BCA also advocates for shifting planning control from local councils to state governments for large-scale projects. The current system, where different councils within the same city have varying definitions for zoning types, creates significant challenges for developers and investors. By consolidating zoning types and adopting a broad and consistent approach across states, as seen in South Australia, the BCA believes more housing projects can get off the ground more quickly.
“The government’s investment in housing will be neutralized by barriers such as prolonged labor shortages, materials price growth, and industrial measures unless these challenges are addressed,” Waldren added.
The BCA’s recommendations come as Australia’s housing crisis continues to dominate public discourse. As the country grapples with the shortage of affordable homes, the push for high-density housing and zoning reforms is seen as one of the most viable solutions to easing the supply-demand imbalance in major cities.
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