Does planning make housing unaffordable? Assessing costs of planning requirements for residential development in three Australian cities

Land use planning often bears the brunt of industry complaints about rising costs of residential development and perceived consequences for housing unaffordability. The residential development industry, both in Australia and in the United States, has made strident protests about the direct and indirect costs associated with the planning process – from complying with building and design controls to the time taken to secure approval and contributions towards local infrastructure. Although there has been academic interest in the relationships between land use planning and the housing market, little attempt has been made to examine these industry claims by quantifying costs to housing development arising from planning regulations and related charges. This paper focuses on these issues, drawing on a study undertaken for the Australian Housing and Urban Research Institute (AHURI). The first part of the paper outlines the international literature on theoretical relationships between planning regulation, residential development costs and house prices. Secondly, Australian industry position papers on housing affordability and the planning system (2003-3008) are reviewed. Thirdly, the paper establishes the key categories of planning related costs to residential development in Australia, and compares the development contribution frameworks applying to three Australian cities (Sydney, Brisbane and Melbourne). These cities were chosen as they have been the focus of industry concern regarding the scale of charges in new release areas. Lastly, we identify preliminary implications for planners and policy makers in designing regulatory requirements that balance affordability concerns with other essential planning criteria.