Government failure blamed for shortage of houses

PEAK advocacy group Housing Industry Association believes state and local governments are “actively blocking housing supply while publicly committing to fix affordability”.

HIA’s recent analysis finds that outdated minimum lot-size rules embedded in planning schemes across Australia are preventing new homes from being delivered in established suburbs, making it nearly impossible to meet the National Housing Accord target of 1.2 million new homes.

“Governments are setting housing targets with one hand and shutting down supply with the other,” Sam Heckel, HIA executive director planning and development, said.

“You cannot meet housing targets while leaving 1950s planning rules untouched.” 

HIA data shows housing construction remains well below the 240,000 homes a year required to meet national targets, while land prices have surged to record highs.

Despite this, up to 80 per cent of residential land in many cities remains locked into low-density zoning or similar, with minimum lot sizes that effectively prohibit subdivision.

“These rules are a political choice, not a technical necessity,” Heckel said.

“They were designed for a completely different time, yet governments continue to protect them even as affordability collapses.

“Minimum lot sizes are one of the easiest supply constraints for governments to remove yet remain largely untouched because of political reluctance to reform suburban planning controls.

“Governments keep talking about affordability but this is where it is being lost.”

Heckel said smaller, sensible lot sizes in well-located suburbs would deliver more homes quickly, without high-rise development and without major infrastructure spending.

“Concerns about overdevelopment are being used as an excuse for inaction, despite the fact subdivision is already limited by stormwater rules, flooding, demolition costs, heritage protections and market demand.

“The market already decides where subdivision works and where it doesn’t. What governments are doing is stopping it everywhere, regardless of context,” he added. 

“HIA modelling shows reducing minimum lot sizes from 500sqm to 300sqm would cut the land cost of a new home by more than $200,000 providing immediate relief for first home buyers and downsizers.

“This is a fast, low-cost reform that governments could implement tomorrow.

“If governments are genuinely serious about housing supply and affordability, minimum lot sizes must go.

“Continuing to defend them means accepting higher prices, lower supply and ongoing failure to meet housing targets,” Heckel said.