Planning Regulations and Administration

Planning regulations and administration may well be the most puzzling parts of the housing process in Australia. It can be a mystery to people on the outside and is a unique maze to those on the inside.

Broadly speaking, ‘planning’ refers to how the land in a local area will be developed and managed for its best use in the community. Zoning is an element of planning concerned with how land can be used (for example, for housing, industry, or recreation).

Planning and zoning aim to ensure the current and future needs of the community are met. Both assign legal rights to benefit from something belonging collectively to the Australian public; the unrealised value of a lovely home and neighbourhood. 

Planning and zoning decisions are related to the: 

• housing type (e.g. apartment, semi-detached, etc.), 
• density (e.g. height, floor space, green areas, parking, etc.),  
• design (e.g. building separations, setbacks, Apartment Design Guide, etc.)   

Decisions also consider heritage conservation and environmental sustainability, and are impacted by infrastructure, public services, and economic activity linked to population. 

In some ways the local planning system does exactly what we'd love to see more of; it gives the community a say in the decisions that affect them. But we have to get the balance and incentives right to determine the best outcomes for the community of the future, not just the desires and interests of the community today. 

The Impact on Housing Affordability 

Many governments and experts think Australia needs more housing, but the planning system is constraining growth that's resulting in higher house prices and reduced affordability. 

This includes the role that Local Governments play in how well the system functions. Communities considering more housing have a say on what gets built where, when, how and for whom, making it harder for new or future residents to have a say in decision making.

You have probably heard of the NIMBY (Not in My BackYard). It is often a derisive term given to strong opposition to local development by local residents. Residents can be motivated to preserve their existing community to maintain high value and good functioning amenities and services. 

On the other side there is the YIMBY (Yes in My BackYard) movement, which has formed in response to the housing crisis and is supportive of development, including increasing housing supply where it is needed.   

These different values and perspectives on how neighbourhoods should look and feel can slow down development. Finding a balance between the voice of current residents and the ideas of future ones is key. 

Land use planning and administration may also change the character of neighbourhoods in undesirable ways. Restricting the types of housing that are permitted can unintentionally create or exacerbate existing economic and racial divisions. Aesthetic and ‘character’ requirements may discourage different types of new residents, or, conversely, alienate those already living in the neighbourhood.

The impact on housing choice 

There is evidence that Australia does not have an adequate or equitable housing mix, given what our households look like these days.  

In terms of what we need and want, our households are getting smaller and smaller; the average household size has fallen from 3.5 in 1966 to around 2.5 in 2022. The shrinkage is linked to demographic trends of lower and later birth rates, an ageing population living in their homes longer, more family break-ups and changing preferences.   

Instead of consistently building smaller houses, we appear to continue building larger, stand-alone houses adding bedrooms. In 2019/20, Australia had around 3 million unused bedrooms! 

Most residential areas are zoned for low density, meaning stand alone family homes. As an example, over 70% of residential land in the Greater Sydney area is reserved for low density homes, ignoring the need for medium-density options close to the city.

The Change Effect 

There are mixed views on what would happen to supply if those zoning constraints were lifted. No one knows for certain which rules suppress housing supply below what the market would provide if rules were reduced or relaxed.  

Since the late 1960s, Australian governments have pursued policies of urban consolidation, primarily through rezoning and relaxing development controls. However, the effectiveness of these policies in increasing supply is debated. 

Policy Personified 

Jeremy and Olivia are eager to enter the housing market as their family grows, and they’ve set their sights on Sydney’s outer west. They’ve found an ideal location but are aware of a property developer submitting an application for an apartment development and hope to buy an apartment off the plan.

Meanwhile, Roberto and Gianna have lived in this Sydney suburb their whole lives and are concerned about the rapid changes. They worry that more apartments will bring increased traffic and strain public services, threatening the green space and neighbourhood feel they helped to build. If the development goes ahead, they’ll face the tough decision of staying in a neighbourhood that no longer feels like home, or moving elsewhere, potentially unable to afford a house of their own.