When we talk about Australia’s housing crisis, interest rates and investors dominate the conversation—but the real drivers run deeper.

In this episode, we unpack how Australian housing policy—particularly zoning and planning reform—is shaping the housing supply crisis, and whether strategic planning reform can genuinely improve affordability without destabilising the market.

We explore the economics behind land scarcity, why middle suburbs have become effectively “locked up,” and how allowing three storey townhouses and gentle density could reshape housing supply. Brendan breaks down what broad upzoning actually means in practice, how Victoria and NSW are approaching reform differently, and whether these changes meaningfully shift feasibility for developers.

For investors, this raises the bigger question: if scarcity underpins capital growth, what happens when supply constraints are relaxed? Does planning reform erode returns—or simply create a more functional market?

If you care about Australian housing affordability, the housing supply crisis, or the long-term fundamentals of property investment, this episode cuts through the politics and gets to the economics.

Episode Highlights

03:28 — It’s Planning Bans, Not Approval Delays

05:58 — The Real Demand for Missing Middle Housing

09:01 — Melbourne’s Affordability Trade-Off Explained

13:30 — Development Costs and Feasibility Realities

15:31 — The Hidden Zoning Tax on Housing Supply

18:06 — Why Townhouses Beat High-Rise in Suburbs

21:36 — The Economics of Three-Storey Townhouses

24:38 — Land Size, Lot Layouts and Buyer Preferences

26:26 — Property Advice and Strategic Thinking

27:33 — Sydney vs Melbourne: A Zoning Divide

29:01 — NIMBY Politics and the Density Debate

34:02 — Can Builders Deliver More Townhouses?

38:15 — What Global Upzoning Success Looks Like

39:12 — Unlocking Australia’s Locked-Up Suburbs

44:04 — Stamp Duty and Why People Don’t Move

48:45 — The Big Property Lesson from This Debate

49:49 — Final Takeaways and Listener Questions

Links

1. Planning better cities - Grattan Institute
2. More homes, better cities: Letting more people live where they want

About the Guest

Brendan Coates is a leading housing and economic policy expert specialising in Australian housing policy and structural reform. His work focuses on planning reform, housing supply, taxation settings and the long-term drivers of housing affordability.

With a strong grounding in economic modelling and public policy, Brendan brings evidence-based analysis to the debate around zoning reform, strategic planning reform, and the feasibility of medium-density housing such as three storey townhouses. His research examines how planning systems shape land scarcity, market outcomes and intergenerational equity.

In this conversation, Brendan offers a measured and data-driven perspective on what it will actually take to address Australia’s housing supply crisis—and what that means for both homeowners and property investors.

Connect with Brendan

1. Brendan’s LinkedIn
2. Grattan Institute’s LinkedIn
3. Grattan Institute’s Website
4. Grattan Institute’s Facebook
5. Grattan Institute’s YouTube

Resources

1. Visit our website: https://www.theelephantintheroom.com.au
2. If you have any questions or would like to be featured on our show, contact us at:
3. The Elephant in the Room Property Podcast - questions@theelephantintheroom.com.au
4. Looking for a Sydney Buyers Agent? https://www.gooddeeds.com.au
5. Work with Veronica: https://www.veronicamorgan.com.au
6. Looking for a Mortgage Broker? alcove.com.au
7. Work with Chris: chrisbates@alcove.com.au

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See you on the inside,

Veronica & Chris

TEITR428 (Brendan Coates)

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We are joined by Brendan Coates, housing and Economic Security Program director at the Grattan Institute with a background spanning the Australian Treasury and the World Bank. Brendan brings a macroeconomic lens to housing policy and has led major research into how planning rules shape affordability, productivity, and the way our city's function, drawing on findings from more homes, better cities, and related work.

He challenges the assumption that protect. Neighborhood character should trump adding more homes and lays out what meaningful reform could actually require.

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Brenda: Thanks, Veronica. Thanks Chris. It's good to be with you.~ ~

CB: ~Um, ~obviously your report,~ uh,~ more homes, better Cities, um.~ um. ~I mean, what's your take on, obviously there's been a lot of reforms, particularly in New South Wales, Victoria also just even recently is starting to announce more changes.

Brenda: Yeah, Chris, I think I'm more optimistic about housing in Australia now than I have been for a long time, which is to say that governments are actually acting on the evidence. So the Victorian and New South Wales governments are. Acting to get more housing built by relaxing those land use planning controls.

I'd say in the common,~ um,~ in the media,~ um,~ landscape, new South Wales is seen as being the leader, but our work would definitely say the Victorian reforms are much more ambitious. ~Um, ~in fact, I would probably go as far as to say the Victorian reforms are the largest economic reform I've seen any state government undertake in Australia in the last 20 years.

Veronica: So that's two states and, I guess if we focus on Sydney and Melbourne, that's, a significant proportion of our total population that's covered. By your research or covered by ~ um, uh, ~these reforms, a lot of existing homeowners, you know, believe that density, increasing density will erode their property values or quality of life, right?

So when you say that governments are, are working on the evidence here, or acting on the evidence, what does the evidence actually say?

Brenda: So like we are looking at planning systems, which are necessary. Planning is needed to sort of mediate the public realm and coordinate infrastructure so that you then have a world where you can build housing and you open your front door and you drive your car under the street. There's a road that's been built there.

So these systems say no to new housing by default and guess only by exception. Our numbers show that, you know, 80% of residential lands within 30 K of the center of Sydney, and nearly 90% in Melbourne is zoned for three stories or less. It's not just Melbourne, Sydney, though three quarters of land in Brisbane, Perth, and Adelaide is zoned for two stories or less.

And in those smaller states it's things like minimum lot sizes. You can have a a site that's, you know, six Ks from the Adelaide, CBD and you can't subdivide it to anything less than say, a thousand square meters. And in a world where land is ultimately becoming scarcer, as our populations grow and we become wealthier and we demand more of it, then being constraining what you can do with that land has a really big impact on housing affordability and availability.

~Um. ~And so when we think of planning systems, a lot of the commentary is often about,~ um,~ process like,~ uh,~ it took me 12 months to get my planning permit, but the bigger impact is actually the bans rather than the burden. So the fact that we just make it illegal to build a lot of the housing typologies that people wanna see.

I had a house and land package on the urban Fringe, which by the way, the typical land house and land package on urban, on the urban fringe of one of our major cities, the land size is normally 400 square meters. So the, the great Australian dream of the quarter acre block is already dead. It's just a question that we haven't caught up in the middle suburbs.

Veronica: I've seen a lot of,~ um,~ um, subdivisions, well in Sydney, anyone, the outer suburbs that are sort of down at even just 250 square meters. but what I think is sort of interesting and what goes through my mind is that if we look at the. Way our cities are currently, you know, a lot of your arguments is around, you know, people want to live in certain areas.

Brenda: that's getting the causality slightly, the. Wrong way around Veronica. I think what people want is that a lot of cases, they want access to areas that are close to the city with good access to jobs that often are located in the city, particularly if you're in professional careers, access to transport, access to amenities,~ um,~ and all of those things.

And those things are prevalent in the areas within 10 to 20 kilometers. Of the centers of our major cities, right? That's where the most attractive places are. And what we see is that those are precisely areas where we don't build anymore or very little new housing, you know? So there's this missing middle.

I think it matters to a degree,~ um,~ with the quality of what gets built next door. So I buy the argument that,~ um,~ you know, an economist will tell you that there's the idea of externalities, that basically if you put up something next door that's kind of crappy and it's,~ um,~ concrete, that sort of bleaches and bleeds and it's not very nice, then that has an effect on the streetscape.

~Um, ~I think. What our work shows is that the most important priority is allowing a lot more of that gentle density. It's often two to three story townhouses where if you have a street of, say, by street that's got like 50 homes on it,~ um,~ um, give or take, ~ um,~ and I should say Melbourne, Australian cities are some of the least densities of their size in the world.

~Um, ~what it seems to be to us is the planning rules. So if you have just that example of say my street with 50 homes on it, if five of those get turned into four townhouses, you increase the density of the area by 40% and the street still looks the same. ~Um, ~you've still a leafy green street.

That's the stuff where drives the amenity more so than the home itself in most cases.

Veronica: There is a couple of streets in,~ uh,~ inner city suburb in Sydney called Alexandria. I don't know if you've actually checked it out. ~Um, ~and. I've always thought it was such a really good example of exactly what you're talking about, where side by side you've got sort of original Victorian terraces.

Then you've got sort of a unit complex, three stories. Then you've got, you know, few townhouses and then a warehouse conversion, and they're all sort of side by side, all tree lined and, it's seamless. It, it actually blends very, very well. It's very well designed. I haven't seen. ~Uh, ~that executed so well, many places.

You know, five Ks out from the city, 10 Ks. Dean 20, so on. And the Melbourne story is interesting because it seems like there's heaps within the first five kilometers over the last 20 years. Right. So heaps of construction of new dwellings, which we all know about the Melbourne story with apartments and then sort of nothing in the, five to 20, 25 K radius and then heaps of outer suburbs being built.

~Um, ~but it's sort of interesting 'cause that. I, I wonder what you have to say about that because Melbourne's story is a ~ uh,~ problem. There's a legacy of a depressed department market for the last decade or so. So I guess, what's the incentives for like a developers to build and b for buyers to purchase when you've got sort of some examples like that that don't seem to have been particularly successful?

But you know, there is a tension here, which is that I look at the Melbourne market and Melbourne now has the second most affordable housing of any jurisdiction in Australia on a price to income ratio. That to me is a roaring success. That is literally what we want. And ~um, ~you know, people can have different views on this, but Melbourne, you know, Melbourne house prices used to be the second most expensive in Australia versus the incomes, the median incomes of Australians.

You know, if you go into Melbourne on a,~ uh,~ any night of the week, the place is absolutely pumping because you international students, for example, just as one example. Enormous numbers of them live in the CBD. When I go to Sydney, they're living in share houses around Randwick,~ um,~ rather than in sort of apartment buildings that have been built in the area.

The second reason Melbourne is so much more affordable compared to Sydney is that. You can still buy a house and land package on the urban Fringe. Yes, it might only be on a 400 square meter block or smaller, but it's gonna go for six, $700,000. The equivalent in Sydney is 55 Ks from the city, and it's gonna cost you 1.2 million.

so it's a success story maybe for someone who wants to get in now assuming that, oh, we've got a new equilibrium, maybe. Maybe they'll actually get some growth over time. But particularly for apartments where first home buyers will outgrow them. Relatively fast. They've been trapped. so how does, how do we reconcile that, you know, in terms of a success story,

Brenda: Well, I go, but it goes to this core, core premise, right? Is that I want housing to be more affordable, which means I don't want prizes to rise.

Veronica: You wanna stabilize them?

CB: Obviously there's s first element, right? ~Uh, ~planning reform, you know, so it can happen a lot faster. You know, patent booked, sort of designs that are auto-approved sort of styles of property that, you know, a lot of,~ um,~ you know, new South Wales is sort of released. I'm not sure about Victoria, but

Veronica: Victoria has it too.

Like how do, how are we gonna get more built, I guess.

Brenda: Yeah, so this is, I think is the main contribution, Chris Veronica, of our work compared to what's come before is that we have literally assessed the feasibility to build more housing on every single site that exists in Melbourne and Sydney. So we have modeled the built form controls that apply across the space cities today.

I don't know if you remember the line from Clueless. ~Um, ~that basically we are like, look at a mono planning from 10 meters away. That's what our modeling will tell you. Would you either of you two or any of your investors,~ uh,~ uh, listeners to this podcast, go and buy the corner site just down the road on the basis of our modeling and say, you can definitely build five townhouses on that site in Melbourne.

That's what that idea of the zoning tax comes from, that you've talked about with Peter Schula from the CIS before. ~Uh, ~much bigger in Sydney than it is in Melbourne. In Melbourne, it's actually typically a hundred to 200,000 in Sydney. In a lot of areas it's 300,000 plus. Secondly, we went through and estimated with the reforms that the Victorian New South Wales governments have done, how much are they actually adding to the, capacity theoretically for more housing or what share of that is commercially feasible?

And the Upzoning in Melbourne, they've up zoned for the equivalent of 1.6 million extra homes, theoretically could be built, of which about 500,000 are commercially feasible. So they're both permitted under the planning laws today, and they're profitable. In New South Wales, it's about 900,000. 'cause New South Wales reforms are not as ambitious.

But then thirdly, what's profitable? the thing that is most profitable as it is right now are three story townhouses. Because they're stick builds. You don't need any special equipment. two guys, a dog and a ute can get materials delivered to site and you can build them. You might need a concrete pool for say the foundations.

CB: Yeah, so in Melbourne it's a lot of building these,~ uh,~ I mean, and that sort of planning controls, you particularly it's gonna be in areas that are a bit more the affluent areas, right? So that the more premium areas and then it's sort of getting past the nimbyism within that, so that suburbs to say, Hey, we are comfortable with three level townhouses, but at the moment they're not.

Right. because I don't think a lot of the zoning says you can go three,

Brenda: Yes. So you can now go three. Story in everywhere except the neighborhood residential zone where you can go to under the townhouse code. The council cannot deny the permit on the basis of the built form control. So the built form controls, say setbacks, height limits, you know, a bunch of things that basically imagine a a theoretical box that you're allowed to build within him.

And if you bill within the box, the council can't say no.

CB: But that's in new, that's Victoria, right? So New South Wales though. I don't think you can go three though, can you?

So on the street that I'm on. ~Um, ~you could turn that into five townhouses pretty in a pretty straightforward way, kind of as of right. Essentially,~ um,~ with very little discretion from the planning,~ uh,~ the council planning officer in Sydney, that same block, you'd be lucky to be allowed to subdivide into two dual locks.

Geo occupies, and that's where New South Wales has just missed a trick. They have not done what Victoria has done in allowing gentle density across the city.

Veronica: Which is a real shame actually, because you know, I think of lots of areas. I mean, I'm in the inner city and I think of lots of areas where that would benefit from that. It's funny, when I first started. In real estate, which is going about 26 years now. ~Um, ~I was in the inner West Council, it was council back then, and they increased ~ um,~ the finished land size requirement for a subdivision.

And then they said, right, minimum size to Subdivides, 400 square meters. Otherwise you've gotta be a strata subdivision. So all this messiness comes into the whole thing. ~Um. ~and that again, it just pushes land prices up so when you got the 400 square meter block of land, it's magic, right?

You can do things with that, but it's not that valuable if it's slightly less. ~Um, ~but a lot of larger houses were retained as a result of that on their 330 square meter blocks of land,~ um,~ because it was no longer feasible to turn 'em into two. So it actually changed what could have actually created more housing back then.

I think what the experience of Auckland and a lot of other cities show is that you can actually get a lot of density just with that sort of gentle density three story townhouse kind of, or walk like you, when I say townhouses, there's like a multitude of different housing typologies that. I mean like row houses and lots of different things, but all fit inside that envelope that of a three story with setbacks on either side,~ um,~ you know, on a lot.

And that's, I think the future for Australian housing for the next few years.

CB: why is this three story such a big element? Like why does it not work? Feasibility, if you go two levels? is. That extra space, that extra level creates, makes it more feasible.

' cause you've got, like, if you are doing a redevelopment, you are buying the house competing against someone else who want, like me, who's choosing to live in this house now. You're then destroying those capital improvements. So you are several hundred thousand dollars in the hole before you start, and then it only makes sense if you can then make greater use of the land to generate.

Enough floor space that you can sell to make the whole project stack up at a, at a profit. Right. and that's why in any street, the first homes that get knocked down are always the kind of the crappiest, the ones who people have done the work. Whereas if I renovate my house and put a pool out the back in a big, you know, living space, entertainment area, ~um.~

It could obviously be three different homes. The point is, it's just it's enough floor space to be able to sell. To make it worth knocking down the existing dwelling of whatever quality it is. So that could be a bunch of three stories where anana lives on the ground floor in a three bedroom or two bedroom unit, and then you've got younger people living on the walkups on the second and third levels.

It could be three stories up and down. ~Um, ~we've lived in those kind of housing homes before and they're actually, they worked pretty well for us. ~Um. ~But it's basically what tells you there's demand for that. People want it is because they're willing to pay a lot of money to buy that hot property or to rent it much more than it would cost to produce it.

until recently in Melbourne, and we still don't, in Sydney, we don't allow that to happen.

And there's quite a, a lot of that stock that probably developed around 20, 25 years ago, not in recent times. it, back to your thing about. We're talking about desirable places to live and what people will live in in order to be there. ~Um, ~so there is a demand for that type of stock and because Chris lives up the northern beaches and he is, you know, he sport with space, he's got no idea what we'll give up on to live in, close in, but.

From my point of view, I, I look at that and think, well, that sort of solves some problems around land amalgamation because a lot of these sort of rezonings rely on the neighbors to all bandy up in order to sell to a developer who's gonna then build a six or eight story apartment block. Whereas if you are saying what you're saying there is with, a larger block,~ um,~ one.

Brenda: That's right Veronica. So half of all residential zone blocks in Sydney, Melbourne are larger than 600 square meters.

Veronica: Half wow.

Brenda: nearly two thirds in Brisbane, Perth, and Adelaide. ~Um, ~and that's kind of gets to this point with the, the juxtaposition between what we allow in the inner suburbs versus what people choose reveal preference.

People are choosing to live 50 Ks from the center of Sydney on a less than 400 square meter site because that's what they can afford, and it's still costing them a million bucks because land's really expensive. ~Uh, ~Uh, so that tells you what they might be willing to pay to live. 15 kilometers from the city in a three story walkup, like, don't get me wrong, like everyone wants, if they could, would happily live in a two story home on 800 square meters within 10 Ks of the city of Melbourne and city.

Brenda: that's right. That's why they are in demand, but what's in demand is the access to that space. So it might be worth $3 million to someone to live in a house of that size within 10 kilometers, the center of Melbourne. ~Uh, ~but that land would a developer pay much more for that land than $3 million to knock down the existing house and turn it into five townhouses.

And that tells you because they can find buyers for those five tiny houses. And that tells you that the market is there for those housing typologies.

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Please go to cove.com au to reach out.

CB: so in Mossman in Sydney, right. So basically Melbourne seems like they're leading the way, right? know, activity centers, you know, lots and lots of places. Wait, it was rezoning basically everything. They're already pro development down there for a long time, so it's like just a tweak really for them.

Right? They're not just duplexes. I mean, like in Mosman for example, there's this 65 mustin street's. It's a Prime Street. It's surrounded by, you know, five, $10 million homes and there's like a eight story sort of apartment block going up, right? and I guess for everyone in mosmans up in, in, in arms, right?

Because why would you want an eight story apartment block looking over your back fence, right? Like, and you know, if you are doing it, why so do you think that this is the solution the council should be? Not, Hey, don't, we don't want development here, but we want to just. You know, bringing in lots of three, four level townhouses, duplexes.

Brenda: I think what we've seen is driven by perceptions of the politics of Nimbyism, not in my backyard. Right. ~Um, ~and I think one of the reasons that conversation broadly, Chris Veronica has changed over time is because, you know, housing has gotten so dire in Sydney that you can no longer say.

until recently, you could say I'm pro-housing, but not in my backyard, and say we should just build more greenfields 50 Ks from the city. My sense is the politics has become much more bipartisan in Sydney now. We're both,~ um,~ the premier Chris Mins and the opposition leader Kelly Sloan are talking about allowing more density near the suburb in the suburbs because it's no longer credible to say to younger people in particular, oh, you just gotta go to the greenfields 'cause the greenfields is not a viable option if you wanna work anywhere near the city.

So when we are thinking about the politics here, I think New South Wales seems to have made a decision. We are gonna up zone in very particular locations. They've got this housing. Development authority, which basically says you can apply for a spot up zoning. So a warehouse in the inner west can go from being a two story warehouse to a 40 story apartment building.

My argument would be, yes, gentle density is more likely to be amenable to the community. 'cause it's more gradual change. You know, once you are three doors down from the house, you literally cannot tell it's a set of townhouses rather than a freestanding home. Whereas if it's a 10 story apartment building, that's very obvious.

reinforce concrete basements. ~Um, ~the fire rating goes up, they're, um,~ um,~ height, they're more stringent building regulations for lots of like finger mascot towers, right. ~Um, ~all of that sort of stuff. So we run a scenario where there's an, uh, an~ uh,~ an area in Sydney.

It's covers 9% of Sydney covered by what's called the low and mid-rise housing policy. Anything for up to six story apartment buildings for three story townhouses, up to six story apartment buildings. And we run a scenarios like, okay, if you allow different housing typologies on each of these sites, what share of them are profitable?

And more than 40% of those sites, if you build a three story townhouse, it's profitable to build. Today, 10% of those sites are profitable. If you're building a four story apartment, building less than 20% for a five story apartment building. 25% for a six story apartment building. And so to get, as for as many of those sites to be as profitable as the townhouses, you gotta go to 10 stories.

Veronica: So this sounds like there's an alignment though, that the NIMBYs, shall we call it, or even just the, the residents, existing residents of an area would find the three story. Requirements. So much more palatable. And you've got developers who have been voting with their feet anyway. Because the big question, and we've asked it many times in this, very podcast, has been, you got all this rezoning, why aren't we seeing more and more development?

And we know that developers got one chance at maximizing the profit for a site. It's a one shot, right? So of course, if they've got the capacity to wait, they're gonna wait for more favorable market conditions or zoning or costs or whatever it is that they're waiting for,~ um,~ to make sure that they maximize the profit.

so in this particular,~ um,~ argument, well, why haven't the NIMBYs grabbed onto this one? You know, in terms of a way to actually support and champion this type of, um,~ um,~ rhetoric.

~Um, ~we'll see which one yields the most housing, and we'll also see which one generates the larger political backlash. ~Um, ~but it would strike me, you know, from our perspective, we need to allow some version of both. ~Um, ~not necessarily spot up zoning, 40 story apartment buildings, but allowing taller apartment buildings around major transport hubs where that demand exists.

But saving Melbourne, the townhouses are feasible now. The activity centers, which is up zoning around these 60,~ um,~ train and transport hubs. A lot of that doesn't look like it's feasible now and probably won't start to be feasible for another five years. But you probably need to allow that typologies now so that in five years time when the economics improve you, see a lot of it happen.

CB: Do you think we've got enough,~ uh,~ supply of labor build these sort of turn? Because it's a different, whole way of going about development, right? Like, you know, does the big players want to play? You know, do they want a hundred? Four, or you know, four townhouses, like 400 sites that they're selling.

Or do they want 10 buildings? and it's a different type of skillset, right? To, to play in this and order to make a profit on the townhouses. And secondly, like. Often these areas, like they have a lot of established homes that are renovated that they don't really want to knock down.

They're quite cost to sort of, you know, 'cause they've all gentrified, they've all renovated,~ um,~ they've all seen a lot of value in renovating it because they can't afford to upgrade. And so they've decided to make it their sort of forever home. And the turnover rate's really tight. you know, they've been living there a long time.

Brenda: Yeah, well that's why, so we, we are using the numbers of what those, each of those homes would sell for today, including the renovation. So to the extent that totality data, correctly reflects, can, you know, the valuation of particular homes and the only ones that's gonna miss is where a renovations happened since the home is transacted.

Right? so they'll, Underestimate some of the acquisition costs for some of those sites, but I don't think enormously so, but that's why say Melbourne, they've unlocked capacity, extra permitted capacity for a million townhouses. Only 400,000 of them are profitable.

Build. ' cause my, my home, I don't know if we've not looked in the data, whether it classifies my home as being profitable or not. Probably not, because it's not, it's not a, you know, the, in terms of the quality of the homes of the street, it's kind of the median, right? But there are homes that are. Have been lived in for a long time and haven't been updated, and they're the ones when they go up for sale that'll be bought by a developer.

~Uh, ~partly 'cause firm size gets a bit bigger and you get more competition between firms, but it, these are small firms. I think you guys should do a podcast on, given these reforms on like what it would be like to do more of this kind of development yourself. I'm not sure if you've done one recently.

~Um, ~because a lot what the Auckland experiment showed is that you get a lot of small developers building a lot of. Small sites. Now you people use the townhouse code. Developers can use the townhouse code to build a hundred townhouses on site, on a bunch of sites if they've consolidated five blocks or if it's an industrial site that can be turned into,~ um,~ five that, that's zoned appropriately.

So I've got friends nearby who are knocking down their house and doing a metric on home that's half the price of renovating the existing home. They will not get involved on any site if you need planning approval. And so I think one of the questions is there's probably gonna be an industry start to sprout up of offering these kind of things at scale.

Because if there's no discretion in the system and that's discretion is toxic for deploying capital at scale with good design and bulk buying of. Materials. Um, my guess is you'll start to see more players just offer essentially kits of here's how you can turn into four townhouses.

Veronica: Exactly. I mean, it sort of, it's, it lends itself to that. I mean, you've used Auckland as an example, obviously, of what's possible. Are there any other cities that have done this?

Brenda: There's a few different ones. ~Um, ~I think Auckland's the clearest case because it's the one where we saw a big up zoning, like 75% of the land area of Auckland got up upside. ~Um, ~other places have done it. Lower Hut in New Zealand's done it as well. Seattle, Minneapolis. Zurich. ~Uh, ~there's also a lot of examples in, there's a really good risk study out of New York where parts of New York boroughs have been up zoned and they actually track exactly which sites got built on, and it's really striking.

If you're allowed to go to four stories, nothing happens. If you're allowed to go to 10 stories, then it gets demolished because you're destroying the existing capital improvements and you're making it work. So it just, it reinforces that the economics are, they're real.~ ~

CB: ~um. ~I'm just thinking like if you've got a block of land in Rose Bay, right. And or Mossman, Sydney, for example, you don't really want to sell it for townhouses right now. A because they can only do duplexes on it, right? and it's really expensive for them to renovate it, right?

The A cost to build B, the quality of Rena they're gonna have to do in those areas. ~Um, ~they don't wanna leave because they're sort of in the area. ~Um, ~so they do, they would love to downsize, but that stock hasn't been sort of existing and they only wanna downsize some stupid offer. Site, so they're just gonna just sit on this property, right?

So. like if the developer doesn't want their site, then who else wants their site? You know what I mean? They're sort of, they're stuck. Is that sort of your take as well? Like, it, it's obviously, people in Rose Bay are selling because their site makes sense to a developer. But if you haven't got a site that makes sense to someone who's got an old house on it and another developer's not gonna come by and the only person who's gonna buy that house is someone who can afford to do a big Reno to it.

Right. ~Um, ~so you're not giving an alternative option to that person selling.

Brenda: Yeah, that's right. And so that, like one of the problems we have at the moment is that because sites that are developable, that are permitted to develop are scarce. That leads to the kind of strategic ba bidding up of those sites by developers and the kind of strategic behavior we were talking about before where people might sit on a site thinking, I can maximize my value long term.

The average turnover of a home, you know, call it 10 to 15 years, maybe it's more like 20. 'cause these are probably above average value homes, even if it's every 20 years. That's 20,000 sites that are coming up for sale every year, where I might be competing as a someone who wants to live in that house against you, Chris, as the developer, and Veronica, you're another developer.

Now you guys aren't gonna buy them all, but pretty, I'm pretty confident you'd buy enough to build what you want to build. And so there is a challenge. One last thing I'll say. There is a challenge in Sydney or in Melbourne where ~uh, ~people think because of the up zone, they're gonna get this huge windfall.

~Um, ~so. The more sites you have be available, then the more likely you're gonna get that extra housing unlocked and see a lot of development happening. ~Uh, ~and that's how we get a market working that's currently kind of stuck because we don't allow people to build on a lot of sites. And so those sites are scarce, so they're expensive.

Veronica: I've mentioned this many times before on this podcast that I do have a lot of empathy for people who are, are stuck in these rezoned areas. A top. Odd zones in particular up the north, north shore. And some people may have no sympathy of people who have a leafy, you know, a lovely big renovated home on a leafy block and a leafy street in, you know, Roseville or somewhere like that may have no sympathy for them.

So no owner's gonna come, come, single owner's gonna come by your home. 'cause they know that basically you're gonna get units being built up all around you. So, so there's a real, the way in which, and, and we've, we've said this many, many times and, and I've spoken to a lot of people that are caught out like.

By this,~ um,~ that that's the way this, this sort of heavy handed approach in New South Wales has sort of created that because you don't have that, the gentle Densification. So I, I'm on board. I love your idea. Right. ~Um, ~so is New South Wales gonna take, are they, are they listening to the Gratin Institute on this?

Brenda: Well, like,~ uh,~ we'll see. We are certainly trying to make as much noise about it as possible, which is why I'm, I've come on your, on your show to talk about it as well as everywhere else where I can. ~Um. ~I think we've got an election coming up in New South Wales. The question will be whether they wanna expand on where they are today.

Look, I have sympathy to the extent that at the moment we make it also hard for people to move. So stamp duty means that if you want to move to some, like if your preference is you don't want to have apartment buildings around you. ~Um, ~well look, I respect that. Like that's a, that's the choice people very rea reasonably make.

And you should be able to vote with your feet,~ um,~ to move to somewhere that that doesn't happen or where that's less likely to happen. It probably means that you'll find it hard to find somewhere close to the city if we're also gonna have more affordable housing to be hard for you to be close to the city and have that experience.

~Um. ~but if we get rid of the stamp duty costs so you can more easily move, then that would make that situation much better. It's the same conversation we've had before. ~Uh, ~you know, as families grow, they should be able to move house rather than having to renovate their existing house. 'cause you get stuck in a house that no longer is rightsized for you for a whole bunch of reasons.

CB: ~um, ~we've got Paul Scully on,~ uh,~ next week. ~Um. ~So we'll hit in with this, but ~um, ~I'm looking at their patent book on the New South Wales website and I think it's just because you're kind of highlighting this point that this is a missing problem with the New South Wales reforms versus Victoria, which are way more pro-development and probably gonna get more supply come 'cause feasibility is way better. And you look at the patent book, there is literally no designs that are three story. You know, you've got the two story duplexes and townhouses and, and you've got the big apartment blocks and it sort of highlights it. Point. But you know, I think these duplexes like the quality of the architecture they've got on these patent book designs and the quality of the builds is amazing.

Brenda: I would paint to him. Uh,~ Uh, ~the questions I would ask him are, one,~ um,~ why haven't you gone down the path of more gentle density? Why have you stopped at dual occupancies, which in Karin Guy Council to subdivide the minimum, what sizes of thousand square meters. ~Um, ~which just seems crazy to me, frankly.

CB: I thought they have overridden the councils and all the councils have had to come up with an alternative plan, but ultimately they've had to prove that it's, you know, still a line and it's still very pro density. Like I think that's why they've all been freaking out. I thought that.

Brenda: There's, there's different programs here. ~Uh, ~Kristen like the trouble is with this kind of conversation, you get into the weeds 'cause the minutia of planning matters. So there are three main programs in New South Wales. There's transport oriented developments. That's the one where they said you, we will just draw lines on maps at up zone, or you can come up with your own plan.

Well, and in some cases existing state controls that apply. ~Um, ~and so we show that that policy is much less effective than it could be. ~Uh, ~and then third, they've got a, what they call a duplex policy, which is what it says on the tin. It allows duplexes. ~Um, ~but it,~ um,~ a duplex is not the same thing as allowing five townhouses on an 800 square meters.

You put those three things together, and that's why the reforms are so much, frankly a, they're, they're missing a lot of the opportunity for those reasons in ways that Victoria is largely sold for.

Veronica: we'll give you the credit when we ask the questions, Brendan. We'll, we'll make sure that they are in our repertoire.~ ~

CB: ~uh, Uh, ~Uh, have you got a, um,~ um,~ property Dumbo for us, Brendan?~ ~

It's actually in a set of ideas in the planning profession that are very resistant to the idea that markets work and that there are trade offs. So I'd say the big one is that we've out the Dumbo is that we've outsourced for the last several decades. Where people can live to,~ uh,~ a planning bureaucracy that,~ uh,~ doesn't measure the outcomes of what it does.

~Um, ~and I should say ~ um,~ just 'cause you're having Paul Scully on next week, the New South Wales reforms are a big step. They're the most ambitious that the government in New South Wales has done for decades. They just need to go further.

Veronica: when you say go further. From my point of view, I actually think it actually is that missing middle. Effectively, we keep talking about the missing middle, but actually it's, it's a much softer, as you say, gentler alternative. So I'm, I'm actually on board. I wasn't quite sure how I was gonna feel at the end of this conversation.

But you've won me over Brendan. So, um,~ um, ~thank you so much for coming back as we have missed you. ~uh, ~we look forward to some more robust conversations with you and some future time. I.

CB: so much.

Veronica Morgan: If you have a question that you'd like us to answer in an upcoming q and a episode, you can send us a voicemail or written question via the website. The elephant in the room.com au. Or you can email us directly at questions at the elephant in the room.com

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