Productivity Commission calls for planning reform to unlock housing supply

Australia’s housing affordability crisis cannot be addressed without significant changes to planning systems, approval processes and infrastructure delivery, according to the Productivity Commission’s Interim Report into Housing Supply Regulation.

The report has been welcomed by the Housing Industry Association (HIA), which says the findings reinforce long-standing concerns from builders, developers and home buyers that regulatory barriers are slowing the delivery of new homes and driving up costs.

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HIA Chief Executive Industry & Policy Simon Croft said the Commission’s recommendations represent an important opportunity for governments to rethink the way housing is planned and delivered across the country.

“The Commission has recognised what builders, developers and home buyers have been experiencing for years,” Croft said. “Australia cannot solve its housing affordability challenges without reforming the systems that control how, where and when new housing can be delivered.”

Among the report’s most significant proposals are reforms that would allow three-storey townhouses on most residential land, reduce or remove minimum lot size requirements, encourage greater housing diversity and introduce faster approval pathways. According to HIA, these measures have the potential to boost housing supply while improving affordability if governments are willing to implement them.

For planners, architects and developers working to deliver new communities, the recommendations could reshape how neighbourhoods evolve in coming decades. Greater flexibility in planning controls would enable a wider mix of housing types in established suburbs, helping to meet changing community needs while making more efficient use of existing infrastructure.

The report also identifies infrastructure delivery as a major obstacle to increasing housing supply. Poor coordination between infrastructure planning, developer contributions and approval processes often delays projects and increases costs before construction can begin.

“The Commission has rightly identified that housing supply is being constrained not only by planning regulation but also by infrastructure delivery and developer contribution frameworks,” Croft said.

He noted that uncertain charging arrangements, conflicting agency advice and lengthy assessment timeframes create unnecessary complexity, with the additional costs ultimately passed on to home buyers.

The Productivity Commission also highlights excessive assessment requirements and subjective planning controls as factors contributing to lengthy approval timelines. Every delay, HIA argues, reduces certainty for project teams and limits the number of homes that can be delivered each year.

While acknowledging that some recommendations are likely to prove contentious, Croft said meaningful reform would require governments to challenge planning practices that have constrained housing supply for decades.

“The Productivity Commission has made it clear that incremental change will not be enough,” he said. “What is needed now is the political will to implement reform.”

As governments continue pursuing ambitious housing targets, the interim report provides a blueprint for reforms that many across the design and construction industry have been advocating for years. HIA says it will continue working with the Productivity Commission and governments nationwide to ensure the final report delivers practical changes that improve housing supply, affordability and housing choice for Australian communities.

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