Three Storeys Everywhere: The Radical Plan to Drive Down House Prices

The Productivity Commission’s plan to reduce house prices through radical reforms has sparked welcome attention in the industry. However, it is crucial not to overstate its potential impact. This won’t be a silver bullet that solves the housing affordability crisis overnight.

State and local government planning regulations have been identified as key contributors to Australia’s high property prices. While regulatory overreach can indeed frustrate builders, some question whether addressing symptoms rather than root causes will suffice.

Governments have invested billions in infrastructure and housing initiatives for decades, yet consistently fall short of targets. The most notable example is the $2 billion committed by Jim Chalmers’ government towards states and councils for housing-related infrastructure, which still lags behind its 1.25 million home target by over 100,000 properties. This raises questions about how much funding actually reaches those who need it.

The Commission’s proposals to allow three-storey developments everywhere, reduce minimum lot sizes, and permit high-rise apartments in areas with existing transport infrastructure aim to boost supply and stimulate competition. However, one must consider the practicalities of implementing these plans at the local level. Will developers benefit from reduced regulations, or will they simply pass on savings to investors and speculators?

Danielle Wood argues that “regulation is the handbrake on new homes,” but it’s also essential to acknowledge regulation’s benefits – ensuring buildings are safe and built to a high standard. Can we afford to sacrifice these safeguards for expediency?

The Commission’s recommendations regarding developer contributions and car parking requirements seem to overlook supply and demand. As long as there is an insatiable appetite among investors and homebuyers, prices will continue to soar.

Australia’s mortgage debt stands at a staggering level among developed nations – nearly 18 percentage points drop in ownership rates between 1981 and 2021 serve as a stark reminder of our collective failure to provide affordable housing options. We can’t keep relying on quick fixes; it’s time for a more holistic approach that addresses the underlying issues.

The Commission’s proposals should be viewed as just one piece of the puzzle. We need to fundamentally rethink how we allocate land, prioritize infrastructure development, and ensure that growth benefits are equitably distributed across communities. Anything short of this will merely paper over cracks – leaving us with a housing market inaccessible to all but the privileged few.

The clock is ticking; the Commission’s final report is due by March next year. We must seize this opportunity not just to implement radical reforms, but also to address deeper structural issues driving our housing affordability crisis. Anything less will be a missed chance to create a more equitable and inclusive society for all Australians – a goal that should have been our priority all along.