Australia's Housing Policy Shock: Accelerated Approval for Townhouses

Victoria has recently introduced a new planning regulation aimed at streamlining the approval process for townhouses and low-rise buildings to accelerate housing supply and meet the growing demand.

Why is this being introduced now?

Victoria needs 2.24 million new homes by 2051 to accommodate the needs of young workers and families. The new regulation aims to promote infill development, which involves new developments in existing suburbs close to transport and job opportunities, rather than expanding into greenfield sites in the outer suburbs. This year is also an election year, and the government hopes to appear proactive on housing issues, as housing affordability is one of the top concerns for voters.

The new planning regulations standardize the rules for buildings of one to three stories, allowing developers to avoid starting from scratch each time. If a project complies with the regulations, there will be no VCAT appeals or repeated negotiations with the council, thereby reducing approval times and administrative burdens. However, local councils can still impose their own rules, which may slow down the process. Regulations for buildings of four to six stories are also being developed, but details remain unclear.

Is this a disruptive change?

The new regulations aim to simplify and expedite the approval process for townhouse developments, reducing bureaucratic red tape and encouraging more developers to undertake infill projects, thereby increasing housing supply in high-demand urban areas. However, this does not directly provide affordable housing, as land prices in inner suburbs are high and construction costs continue to rise.

Political Factors

Critics may argue that this is merely a pre-election sweetener. However, even if it is effective, does that matter? The real test will be how many homes can actually be built. The Property Council of Australia has praised the regulation but warned that taxes (such as land tax) will still suppress investment. They state that without addressing these issues, even streamlined approvals will not solve all problems.

Conclusion

This is a step in the right direction, but it is only part of the puzzle. It is crucial to manage expectations regarding its short- and medium-term impacts and to consider the political motivations behind the announcement. By focusing on simplifying planning processes, particularly for infill townhouse developments, Victoria should be able to utilize its urban land more effectively and move towards a more sustainable and inclusive housing future.