Australia’s Housing Crisis: ‘Gentle Density’ Could Unlock a Million New Homes
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Australia is facing a critical housing shortage, but a new report suggests a path forward that doesn’t rely solely on sprawling advancement or high-rise construction.A study by the Committee for Economic development of australia (CEDA) and Urbis estimates that unlocking “gentle density” – allowing more townhouses, terraces, and dual occupancies in existing suburban areas – could deliver up too one million new homes nationwide.
The Case for ‘Gentle Density’
The current debate surrounding housing supply often focuses on extremes: dense inner-city developments or sprawling outer suburban communities. Though, this approach overlooks the meaningful potential of medium-density housing, according to the report. Gentle density refers to the development of terraces, townhouses, low-rise apartments, and dual occupancies in well-located and serviced areas.
“Australia’s housing crisis has been decades in the making and requires action on many fronts,” stated a senior economist and report co-author. “But ‘gentle density’ can deliver more housing in middle-ring neighbourhoods where people want to live, while making better use of existing infrastructure and transport networks.”
The proposed approach could increase Australia’s overall housing stock by 9 percent. Specifically, the report estimates a 12 percent increase in Sydney, 15 percent in Melbourne, 16 percent in Brisbane and Adelaide, and a more than 1
Falling Short of Targets
Australia has a national target to build 1.2 million new homes by 2029, a goal set by the Commonwealth and state governments. However,the CEDA report notes that Australia has fallen short of this pace every year since 2016.
Despite recent “green shoots” in the building industry – a reported lift in approvals and new home sales – construction is hampered by planning delays and skilled labor shortages. With Australia’s population projected to grow by over 14 million people in the next 40 years,primarily in major cities,housing pressure is expected to intensify. Population growth in cities is anticipated to outpace regional growth by a factor of two.
The Role of Local Councils and State Governments
The report emphasizes the critical role of local councils in addressing the housing crisis. Zoning and planning regulations at the council level are frequently enough cited as impediments to development.
“Rules differ from council to council, we have a huge number of councils in Australia as well,” one analyst noted. “So it’s really hard for developers to get in, to understand what the requirements are, and they are often very restrictive.”
The report suggests that state governments should incentivize local councils to increase zoning through a “carrot-and-stick” approach, perhaps including financial incentives or even taking over planning regulations if targets are not met. Introducing “by-right” planning rules – specifying what can be built without objection based on land size – is also recommended.
Affordability Crisis Deepens
The urgency of the situation is underscored by the worsening housing affordability crisis. Home prices have surged nearly 50 percent in the past five years, pushing affordability to record lows. Recent data indicates that it now takes more than a decade to save a 20 percent deposit for a standard house in most capital cities, with national dwelling values 7.5 percent higher than the previous year.
“I think more and more Australians are becoming aware of the housing affordability issues,” said a CEDA economist. “If it’s not impacting you individually, it’s almost certainly impacting someone in your family. And most people also want their family members to be able to live near them.”
australia’s major cities remain relatively low-density compared to global standards. Melbourne ranks 100th for population but 858th for density, while Sydney ranks 104th for population and 803rd for density. This disparity highlights the potential for increased density without sacrificing the quality of life in urban areas. As one economist stated, “When we see what’s happening with our population growth, with our continued economic development, we can’t keep building further and further out…Middle-ring suburbs and this ‘gentle density’ is kind of the best of both worlds.”
