Australia Faces Housing Shortfall Without Urgent Rezoning Reforms, Warns Business Council

A photo taken on June 16, 2024 shows an aerial view of apartment blocks located in the Sydney suburb of Mascot in Australia. David Gray/AFP via Getty Images

Australia is expected to fall significantly short of its target to build 1.2 million new homes over the next five years unless drastic rezoning reforms are implemented, according to the Business Council of Australia (BCA).

In their newly released report, It’s Time to Say Yes to Housing, the BCA calls on state and territory governments to unlock more land for housing by overhauling restrictive zoning laws, particularly in areas of high demand.

The report highlights that just 176,000 new dwellings were completed in the 2023–24 financial year—64,000 homes fewer than required annually to meet the National Housing Accord’s 1.2 million homes target.

“Without changes to rezoning laws, the shortfall could worsen, intensifying the housing affordability crisis,” the report states.

The BCA has suggested that more land in cities and towns be rezoned to allow medium and high-density housing near transport hubs and essential services.

They also advocate for consistent zoning rules across states, giving developers clearer guidelines.

Additionally, the BCA recommends creating a transparent process for home builders to propose rezoning, which would be managed by state governments.

Bran Black, the CEO of the BCA, stressed that rezoning is a national issue, pointing to the progress made in New South Wales and Victoria, where areas near public transport hubs like Sydney and Melbourne are seeing streamlined rezoning efforts. However, Black believes more work is needed to meet housing demand nationwide.

Lessons From New Zealand And South Australia

The report highlighted Auckland’s 2016 rezoning reforms as a successful model, noting that significant increases in housing supply followed.

Auckland’s changes resulted in housing costs stabilising, with rents dropping 26 percent below what they might have been without the rezoning.

“In 2016, Auckland rezoned about three-quarters of residential land, and a massive increase in home building followed,” Black said.

Closer to home, South Australia stands out for its consolidated zoning approach, providing a state-wide framework that simplifies the rezoning process and gives developers more certainty.

New South Wales Recent Rezoning Plan

In September 2024, the NSW government introduced the State Significant Rezoning Policy, which established two distinct pathways for rezoning: state-led and state-assessed planning proposals.

This policy aims to fast-track rezonings for strategically important areas, shortening the overall planning process by 200 working days.

Speaking earlier on rezoning in Sydney, Premier Chris Minns said his government is committed to increasing urban density near the CBD, especially in areas already served by public transport. However, he acknowledged opposition from some councils resisting these changes.

“We’ve been clear about this, but we are encountering opposition from some urban councils that remain firmly against these proposed changes,” he said.