Three storeys everywhere: The radical plan to drive down house prices July 27, 2026, 10:30pm The Productivity Commission has proposed sweeping changes to Australia’s housing landscape, advocating for three-storey developments on nearly all residential land and the construction of high-rise apartment blocks near public transport hubs. The plan aims to address the nation’s severe housing affordability crisis, which has seen median house prices rise sharply in major cities. In Perth, prices have climbed by 87 percent since 2020, while Brisbane has recorded an increase of 92 percent during the same period. The commission argues that outdated planning regulations are a primary cause of the soaring costs, and that reform is necessary to ensure housing meets the needs of Australians. The commission, tasked by Treasurer Jim Chalmers to evaluate the building approval process, land use policies, and construction methods, has highlighted the role of excessive regulation in limiting housing supply. It notes that the federal government, despite committing $2 billion toward housing-related infrastructure in its budget, is currently more than 100,000 properties behind its goal of constructing 1.25 million homes between mid-2024 and mid-2029. This shortfall underscores the urgency of the situation, even as the property market has slowed since February. The proposed reforms call for the removal of strict limitations on building heights, with three-storey townhouses replacing single-block homes in many areas. State and local governments would be required to allow such developments on all residential land, except in cases involving environmental concerns, hazardous conditions, or heritage listings where protective measures outweigh potential economic losses. The commission also suggests reducing minimum lot sizes, particularly in high-demand regions, and revising zoning laws to permit mixed-use commercial and residential spaces. In addition to altering zoning practices, the commission recommends easing restrictions on car parking requirements, especially in areas with robust public transportation networks. It also proposes replacing broad heritage protections with more targeted, cost-benefit analyzed safeguards. Specific buildings or small neighborhoods could qualify for heritage status, with greater flexibility to delist structures if deemed appropriate. These adjustments aim to balance preservation with the need for increased housing stock. Commission chair Danielle Wood emphasized that overly complex or poorly designed regulations are hindering the ability to construct the types of homes people need in desirable locations. “Regulation is essential, particularly where it ensures buildings are safe and built to a high standard,” she stated. “But too often, other rules are making it illegal or unviable to build the kinds of homes people need in the places they want to live.” She noted that rules preventing the addition of granny flats or the conversion of single-family homes into townhouses are central to the housing challenge. The commission’s findings align with broader criticisms from the housing industry, which frequently points to the burden imposed by developer contributions and other regulatory hurdles. A persistent issue is the overlap and contradiction among local, state, and federal rules, which create a fragmented and inefficient system. For instance, a local council might demand additional trees for a new development, while a fire authority insists on minimizing tree cover to mitigate risks. Such inconsistencies exemplify the complexity of the regulatory environment that the commission seeks to simplify. The report also highlights the impact of rising housing costs on younger generations. Between 1981 and 2021, the proportion of individuals aged 25 to 34 who owned their own homes dropped by nearly 18 percentage points. Meanwhile, Australian mortgage debt per person ranks among the highest in the developed world. The commission warns that without meaningful reform, these trends will continue to strain both individual households and the broader economy. As the government moves forward with implementing the commission’s recommendations, the focus will likely shift toward streamlining regulatory processes and encouraging faster approvals for new housing projects. The success of such initiatives will depend on collaboration between federal, state, and local authorities, as well as the willingness of communities to adapt to more flexible and inclusive development models. The path ahead remains challenging, but the commission’s proposals represent a bold attempt to reshape Australia’s housing future.
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