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Three-quarters of residential land within 20km of all capital cities is highly restricted, according to a new “atlas” of Australian zoning laws.
The Australian Zoning Atlas - a project of the Australasian Housing and Land Economics Initiative and YIMBY Melbourne - is the first national map comparing development rules for residential land across capital cities.
The analysis finds most capital city land within 20km of city centres is highly restricted because of two-storey or low-density rules, detached housing controls or heritage listing.
“The fact that three quarters of the land would be difficult to develop is substantial when we're thinking about a housing crisis that is a housing shortage,” Australian Zoning Atlas lead researcher Jonathan O'Brien said.
“The first step really is to make it legal to build and it's pretty clear that across the majority of our land we haven't done that.”
Until now, there has been little oversight or understanding of rules governing what can be built in Australia’s cities, O’Brien said, and little opportunity to compare states.
“We really wanted to make sure that if we're doing policy analysis about the whole country, then that analysis should be rooted in ground truth,” he said.
“You can only change effectively what you understand.”
And, amid the ambitious National Housing Accord target for 1.2 million homes by mid-2029, the data is “very crucial to solving the housing crisis”.
The atlas shows residential land is most restricted in smaller capitals including Hobart, Adelaide, Brisbane and Perth.
While for a long time they weren’t seeing much growth, post Covid things had changed with internal migration and higher construction costs.
“It’s creating a shock where now these rules matter in a way that maybe they didn't previously,” O'Brien said.
“It's pretty clear the inability to build in Brisbane is an enormous problem.”
In Sydney, around 81 per cent of residential land within 20km of the CBD is deemed highly restricted, with 77 per cent capped at two-storeys.
Melbourne is the least restricted of the capitals: around 43 per cent of residential land within 20km of the CBD is highly restricted and 37 per cent has two-storey limits.
“Melbourne has a couple of advantages housing-wise - one being that it is substantially less restricted and, two, that it's very flat,” O’Brien said.
“But it being very flat should mean that Adelaide is a success as well, or Perth, and that's not really been the case.”
O’Brien said Melbourne’s activity centre reforms, particularly in wealthy well-connected areas such as Camberwell and Kew, show how relaxing zoning restrictions can spur housing development.
“Once it was legal to build in these very expensive areas of the city, we've seen people move to build there, which we think is very positive,” he said, adding similar development was occurring in Sydney.
The researchers suggest a national townhouse code, making three storeys legal on non-heritage residential land that currently only allows two-storeys or low density zoning.
In Sydney alone, they predict this could unlock 1.5 million more dwellings than it is legal to build today.
It would be a “low impact” move given Australians not only like townhouse living but they are cheaper to build than apartments.
“Three-storey townhouses are what you see all across London,” O’Brien said, adding the measure would “meaningfully confront the housing crisis in front of us”.
“If you can just build three storeys in a lot of places, or every residential area, you actually solve a large number of our problems. You make it much easier to deliver housing people want.”
Similarly, European-style density is suggested around transit hubs. Unlocking eight storeys on residential land within 800m of main public transport points could unlock 12.3 million dwellings nationally.
Meanwhile, enabling medium density development on all residential land across Australia could unlock a staggering 66 million dwellings.
“If we want to be serious about confronting the housing crisis, we’d potentially need to see the federal government put forth a minimum permitted density,” O’Brien explained.
“If you can just build three storeys in a lot of places, or every residential area, you actually solve a large number of our problems. You actually make it much easier to deliver housing people want.”
He said the reaction to the Atlas had been positive, with “an excitement within government to finally have the information in one place, which has not been the case in the past”.
Australian Institute of Conveyancers Victorian president Shakila Maclean said zoning changes could boost housing supply, in turn increasing property transactions and therefore conveyancing work.
Some existing homeowners may decide to sell because they dislike changes to their neighbourhood, such as increased density or taller developments.
“It might be a catalyst for some people that have been thinking about it,” she said.
Allowing more housing could also create opportunities for buyers in inner-city areas they previously could not afford.
However, Maclean raised broader concerns about whether infrastructure and community facilities, such as parks, sporting grounds and tennis clubs, could cope with an influx of new residents.
“It’s important that increased housing density is supported by the infrastructure and community facilities needed for a growing population,” she said.
AIC NSW president Jennie Tonner said while rezoning may create opportunities for vendors, buyers and conveyancers, it also makes due diligence more important as the future character of an area could change substantially.
Homeowners in areas rezoned for higher density may receive a premium from developers, while first home buyers could benefit from greater choice.
However, buyers also risk discovering nearby land has been rezoned for high-density development, potentially affecting their light, privacy and property value.
Conveyancers should also encourage buyers to look beyond the property, check the planning certificate and ask the vendor about any proposed changes.
“As a buyer, you can't just look at the property, you've got to look at what's around,” she said, while acknowledging planning rules can quickly change: “It’s so hard because it could change tomorrow.”
Higher density development also needs adequate roads, public transport, sewerage, water, shops and schools to accommodate more residents, particularly in outer areas.
“Your classic example in Sydney is south west. Thousands of people have moved out there but there’s no train, no bus and they all have to use their cars to get anywhere,” Tonner said.
“Unless you factor in all those things, which I don’t necessarily think governments do, that’s one of the reasons why we’re so far behind in the numbers they want to build.”
There is also the question of whether rezoning will translate into new housing.
Tonner believes changes to capital gains and to how self managed super funds relate to new housing are discouraging investors, potentially making some developments financially unviable.
“There is a real lag at the moment with developers deciding whether they want to proceed with ones in the pipeline because of it.”
NSW planning minister Paul Scully said the government was pursuing reforms to boost housing supply but “the Zoning Atlas does not capture any of these major reforms”.
“Under state-based planning controls, the Low and Mid-Rise Housing Policy and the Transport Oriented Development program have liberated planning controls in almost every council area of Sydney,” Scully said.
“Thousands of new homes are now being delivered in well-located areas, close to transport, jobs and services, particularly across our built-up suburbs, areas the former government left untouched for decades.”
The reforms sit alongside the recently released final Sydney Plan, a 20-year blueprint for the city's growth, requiring councils to provide an ongoing 30-year supply of zoned land feasible for housing, he said.
A Housing Delivery Authority has also been created to speed up approvals of significant housing developments.
“This suite of reforms has been crucial to tackling a housing shortage decades in the making,” Scully said.
The NSW Productivity and Equality Commission also recently found the government’s reforms had “doubled the feasible housing capacity across Sydney”.
A Victorian government spokesman said the state “continues to build and approve more homes than any other state but we know there is more to do”.
"For years, some of Melbourne’s best-connected suburbs have been locked up and it’s pushing young people and families out. We’re changing that,” the spokesman said.
“While the Liberal One Nation coalition tries to block homes from being built, we are making it easier for young Victorians to enter the housing market.”
Plans to guide where new homes can go in and around 60 train and tram activity centres aim to encourage more than 300,000 new homes to be built.
The Townhouse Code also speeds up approvals for duplexes, townhouses and low-rise apartments up to three storeys.
Since it was introduced in March 2025, applications for homes surged almost 50 per cent – from 4800 to 7,000.
Meanwhile, a spokesman for Queensland deputy premier Jarrod Bleijie said the Crisafulli government is reviewing the South East Queensland regional plan, which aims to boost housing supply in well-serviced areas and identify future growth locations.
“We’re working through early feedback and further public consultation will occur when the draft plan is released later this year,” the spokesman said.