A new Grattan Institute report argues that Australia’s housing affordability crisis could be eased dramatically through zoning reform and a shift toward medium-density townhouse and apartment living.
Key Takeaways
- The Grattan Institute recommends rezoning all urban land to allow three-storey dwellings.
- Rezoning near transport hubs to allow six-storey buildings could cut house prices by 12%.
- The proposed reforms could save renters $2,000 per year and reduce the median house price by $100,000.
- Encouraging townhouse and apartment development could add 67,000 homes annually.
- Experts say planning red tape and “nimbyism” are stalling housing growth.
Grattan Institute’s Housing Revolution Proposal
The new report from the Grattan Institute calls for a nationwide rezoning of land in capital cities to allow for three-storey dwellings everywhere, and up to six storeys near city centres and transport corridors.
According to the report, such a shift would:
- Reduce rents and prices by roughly 12%.
- Increase supply by making it easier for developers to build medium-density housing.
Cut red tape by removing the need for planning permits if construction meets basic standards.
The Case for Medium-Density Living
Brendan Coates, Director of Grattan’s Housing and Security Program, said that a cultural and policy shift toward townhouses and apartment living is essential for solving Australia’s housing crisis.
“For decades, Australia has failed to build enough homes in the places people most want to live,” he said.
“Now we have a housing affordability crisis that is dividing families, communities, and robbing young Australians of their best chance in life.”
The report argues that planning restrictions and local opposition have prevented adequate supply in middle-ring suburbs — those 5 to 20 kilometres from CBDs — where housing demand is highest.
How Zoning Changes Could Reshape Cities
The Grattan Institute suggests that allowing medium-density housing across more areas could add 67,000 new homes every year over the next decade.
The proposal includes:
- Rezoning all land in capital cities for three-storey homes.
- Rezoning near public transport and employment hubs for six-storey developments.
- Streamlining planning approvals to fast-track compliant builds.
The report also recommends financial incentives from the federal government for states that adopt and meet housing construction targets.
Middle Suburbs: The Missing Link
Data in the report shows Australia’s capital cities have underperformed compared to global peers in housing density, especially in middle suburbs.
While inner-city and fringe areas have seen steady building activity, middle suburbs — the “missing middle” — remain underdeveloped. The Grattan Institute says fixing this imbalance could dramatically improve housing supply and affordability.
“These estimates are not merely theoretical,” the report concludes.
“A large body of evidence shows that when planning controls are relaxed, the result is more and cheaper housing.”
