Upzoning and rapid construction policies have helped New Zealand tackle affordability as Australia lags behind.
New Zealand has tackled housing affordability head-on through “upzoning” policies in high-demand areas, allowing for higher-density housing, a strategy Australia should consider adopting, an expert has said.
It led to a surge in new homes, particularly in regions like Auckland, Canterbury, and Lower Hutt.
A new paper, Less Crowded Houses: The Success of New Zealand’s Housing Policy Reforms and Implications for Australia, by urban economics researcher Stuart Donovan, reveals that these regions represent less than half of New Zealand’s population.
They have accounted for two-thirds of all new housing approvals in the past year.
The paper states the reforms have made housing more available and affordable, benefiting both homebuyers and renters.
Australia Struggles with Policy Overhaul
While New Zealand’s focus on increasing housing supply has successfully reduced house prices and boosted housing stock, Australia remains bogged down in policy debates and delays.
Matt King, senior economist at the Housing Industry Association (HIA), argues that distinguishing between policies aimed at genuinely increasing housing supply and those that introduce new taxes disguised as reform is becoming increasingly difficult.
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“Governments across the country are making announcements aimed at improving housing supply, but it is challenging to determine which policies will genuinely improve housing supply from those that are disguising new taxes,” said King.
The HIA’s Housing Policy Scoreboard, released last week, ranks Australia’s states and territories based on their housing supply strategies.
South Australia leads with a score of 9/10, thanks to its Housing Roadmap, which includes over 100 initiatives to speed up home construction.
Western Australia follows closely with strong planning reforms, streamlined approvals, and a focus on land release.
Despite these efforts, neither state is on track to meet its share of the federal target of 1.2 million homes over five years.
Meanwhile, the Australian Capital Territory scored 4/10 and the Northern Territory 5/10, highlighting significant gaps in their housing strategies.
“This report highlights the need for comprehensive policy reforms across planning, zoning, financial settings, taxation, and skills development,” King added.
New Zealand’s Construction Boom Offers a Model
New Zealand’s housing boom has also driven rapid growth in the construction sector, which now employs 10.7 percent of the workforce, compared to Australia’s 9.3 percent, highlights the report.
The number of construction workers in New Zealand has more than doubled since 2013, with apprenticeships increasing threefold. This boom not only boosts housing supply but also creates jobs, strengthening the economy and providing a model for Australia.
Delays in bringing land to market add unnecessary costs to housing, exacerbating affordability issues.
As New Zealand’s example shows, targeted planning reforms prioritising housing development can result in more homes, lower prices, and a booming construction sector.
Housing Solutions Heat Up as Elections Near
As housing takes centre stage in the upcoming elections, both the federal government and opposition have acted to demonstrate their seriousness in tackling the issue.
In November 2024, Labor legislated two key policies aimed at assisting 40,000 first-time homebuyers: the Help to Buy shared equity scheme and Build to Rent (BTR) tax incentives.
The Help to Buy scheme sees the government contribute 30 percent of a home’s price, or 40 percent for new builds, for buyers earning under $90,000 individually or $120,000 as a couple. The contribution is repayable upon sale.
Meanwhile, the Build to Rent model encourages developers to build multi-unit rental properties, offering affordable rents for social housing. These measures aim to reduce the strain on homebuyers and renters.
Federal Opposition Leader Peter Dutton has put forward his own housing proposals.
His plan includes unlocking up to 500,000 homes through a $5 billion investment in essential infrastructure, such as water, power, and sewerage at housing development sites.
Additionally, Dutton has proposed freezing changes to the National Construction Code for 10 years to alleviate supply constraints.
“We will boost housing supply, rebalance migration, incentivise first-home buyers, and take pressure off interest rates and rents,” Dutton has promised.
The Path Forward
Despite the growing number of policies and promises, Australia faces a challenging road ahead in addressing its housing affordability crisis. New Zealand’s success story serves as a crucial reminder of the benefits of pro-housing policies.
As housing becomes an increasingly central issue in the upcoming elections, Australia must decide whether to adopt policies similar to those in New Zealand or risk falling further behind in tackling its housing crisis. The urgency for meaningful reforms is clear; affordability cannot wait.
