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Is planning the barrier?

Do the Government’s claims about planning stand up to the evidence?

Independent evidence consistently shows that planning is not the principal barrier to housing supply. Housing delivery depends on far more than planning alone. Focusing on planning deregulation while the major constraints lie elsewhere risks weakening long-standing planning safeguards without addressing the real drivers of Victoria’s housing challenges.

Planning is one part of the housing system. It is not the housing system.

Victoria faces a genuine housing challenge, and increasing the supply of well-located homes is an important public policy objective.

The Victorian Government has responded by substantially deregulating parts of the planning system with the argument that planning is a principal barrier to increasing housing supply and improving housing affordability.

This page examines whether independent evidence supports that proposition. It explores three key questions:

  • Is planning the principal barrier to housing supply?

  • Does increasing planning capacity necessarily result in more homes being built?

  • Does increasing housing supply automatically deliver affordable housing?

At a glance

  • The Government argues that planning is the principal barrier to increasing housing supply.

  • Planning is an important part of housing delivery, but independent evidence suggests it is not the principal barrier.

  • Increasing development capacity does not automatically result in more homes being built.

  • More housing does not automatically mean more affordable housing.

  • Housing delivery depends on a complex interaction of planning, finance, construction costs, labour, infrastructure and market conditions.

  • Planning has become the focus of housing policy largely because it is one of the few levers governments can change directly, even though many of the major constraints on housing delivery lie elsewhere.

  • Good planning is a safeguard that balances housing growth with environmental protection, infrastructure and neighbourhood liveability.

  • Communities are being asked to sacrifice long-standing planning safeguards without clear evidence that planning deregulation alone will deliver the promised housing outcomes.

Claim 1
“Planning is the main barrier to housing supply.”

The Government argues that planning is preventing homes from being built today. Is that what the evidence shows?

What independent evidence says

The Victorian Government has repeatedly argued that planning delays are a major barrier to housing supply. This claim has been used to justify extensive planning deregulation, including broader rezoning, reduced planning controls and faster deemed-to-comply approval pathways.

However, independent evidence suggests that planning approval is only one stage in housing delivery and that, once approval has been granted, other factors often determine whether homes are actually built.

The Municipal Association of Victoria (MAV) has confirmed that Victoria already has more than 100,000 council-approved dwellings that remain unbuilt, stating that these projects have not stalled because councils refused approval, but because of “unfavourable market forces.”

Similarly, the Planning Institute of Australia (PIA) observed:

“There is already years’ worth of housing supply with planning approvals, yet many projects aren’t proceeding due to feasibility issues – including rising construction costs, labour shortages, and finance constraints. That’s not a planning failure; it’s a market reality.”

Both organisations make the same fundamental point. Planning approval has already been granted. Once approval exists, planning is no longer the factor preventing those homes from being built.

These findings are reinforced by the National Housing Supply and Affordability Council, which reports that construction activity continues to be constrained by elevated construction costs, builder insolvencies and longer build times, despite planning approvals already being in place.

These Victorian observations are consistent with broader national research. After examining housing supply responsiveness across Australia, the Australian Housing and Urban Research Institute (AHURI) concluded that the impact of planning regulations on housing supply responsiveness is “modest“, while acknowledging some evidence that growth-accommodating controls can contribute to housing supply growth.

AHURI also cautioned against treating planning as a simple explanation for housing shortages:

“The findings imply that thinking on Australian planning reform as a supply measure should extend beyond the simplistic interpretation which assumes that the mere presence of a control is a barrier to supply.”

Instead, the report found that developers respond to a range of commercial and economic factors, including profitability, finance availability and market conditions. It also concluded:

“Often the most important aspect of the planning system from a developer’s point of view is the certainty and consistency of advice provided by planning officers. Planning controls may be generally restrictive but if they are applied consistently the developer can work with them and deliver housing.”

What this means

Planning approval is a necessary step in housing delivery, but it does not compel construction.

Whether approved housing proceeds depends largely on commercial decisions, including market conditions, construction costs, financing, labour availability and developer feasibility.

This evidence challenges the claim that planning is the principal barrier to housing supply.

It also raises an important question about the justification for weakening long-standing planning safeguards.

If planning is only one factor influencing housing delivery, what evidence demonstrates that reducing those safeguards will deliver the housing outcomes communities have been promised?

A question to consider

If planning approvals already exist for more than 100,000 homes, what evidence shows that further planning deregulation will result in those homes being built?

Key references

  • Municipal Association of Victoria (2025), Bill to rewrite Planning Act must be scrutinised in order to deliver homes Victorians need.

  • Collins, M. (2025), Planners aren’t to blame for housing crisis, Australian Financial Review.

  • Ong, R., Rowley, S., Gilbert, C., Gurran, N., Phibbs, P., James, A., Troy, L., & van den Nouwelant, R. (2017). Housing supply responsiveness in Australia: Distribution, drivers and institutional settings (AHURI Final Report No. 281). Australian Housing and Urban Research Institute Limited, Melbourne.

Claim 2
“Increasing planning capacity automatically results in more housing being delivered.”

Even if planning capacity is increased, does this necessarily result in additional housing being delivered?

What independent evidence says

The Victorian Government’s planning reforms substantially increase development capacity by permitting larger developments across more residential land. The underlying assumption is that increasing planning capacity will translate into more housing being delivered.

However, independent research consistently shows that increasing planning capacity does not automatically result in more homes being constructed.

The NSW Parliamentary Research Service, reviewing the available evidence, concluded that housing delivery depends on a wide range of interacting factors, including construction costs, finance, labour availability, infrastructure, market demand and developer feasibility. Planning is only one part of a much more complex housing system.

The National Housing Supply and Affordability Council similarly notes that housing supply is highly sensitive to macroeconomic and demographic conditions, including interest rates, construction costs and broader market conditions. Expanding planning capacity does not remove these constraints.

The Australian Housing and Urban Research Institute (AHURI) reached similar conclusions. It found that while planning can influence housing supply, the responsiveness of housing production depends on many interacting economic and institutional factors rather than planning settings alone. The report observed that housing supply is influenced by the way developers respond to profitability, finance, market conditions and risk, rather than simply the amount of land available for redevelopment.

Similarly, Professor Cameron Murray found that Australia’s largest residential developers collectively held more than 200,000 housing lots in landbanks, including many sites that already had planning approval. His research concluded that developers routinely stage housing production in response to market conditions and that:

“Planning policy changes may not produce desired housing supply effects.”

Research examining repeated upzoning programs in Sydney similarly found that substantially increasing development capacity did not necessarily result in rapid redevelopment or improved housing affordability (Gurran, Gilbert & Phibbs, 2021).

What this means

Planning reforms can increase development capacity and create additional development opportunities. However, they cannot require developers to build, nor do they guarantee that approved projects will proceed.

Housing is built when projects are commercially viable, not simply because planning controls have been relaxed.

If the promised increase in housing does not eventuate, communities may lose long-standing planning safeguards without receiving the housing outcomes they were told those sacrifices would achieve.

A question to consider

If increasing development capacity does not guarantee that more homes will be built, what evidence shows that broad planning deregulation will solve Victoria’s housing shortage?

Key references

  • Ong ViforJ, R., & Leishman, C. (2024). The economics of housing supply: Key concepts and issues (Research Paper 7/2024). Parliamentary Research Service, Parliament of New South Wales.

  • Ong, R., Rowley, S., Gilbert, C., Gurran, N., Phibbs, P., James, A., Troy, L., & van den Nouwelant, R. (2017). Housing supply responsiveness in Australia: Distribution, drivers and institutional settings (AHURI Final Report No. 281). Australian Housing and Urban Research Institute Limited, Melbourne.

  • National Housing Supply and Affordability Council. (2025). State of the Housing System 2025. Canberra: Commonwealth of Australia.
  • Murray, C. K. (2020). Time is Money: How Landbanking Constrains Housing Supply. Journal of Housing Economics, 49, 101708.
  • Gurran, N., Gilbert, C., & Phibbs, P. (2021). Can ceding planning controls for major projects support metropolitan housing supply and diversity? The case of Sydney, Australia. Land Use Policy, 104, 105278.

Claim 3
“More housing automatically means more affordable housing.”

Where new housing is delivered, is it affordable housing?

What independent evidence says

The Victorian Government frequently links increased housing supply with improved housing affordability.

However, housing affordability and affordable housing are not the same thing.

Under the Planning and Environment Act 1987, affordable housing has a specific statutory definition. It refers to housing that is appropriate and genuinely affordable for very low, low and moderate-income households.

Nothing within the Activity Centres Program requires developers to provide housing that meets this statutory definition.

Independent organisations, including the Australian Housing and Urban Research Institute (AHURI) and the National Housing Supply and Affordability Council, have consistently concluded that increasing market housing supply alone is unlikely to deliver genuinely affordable housing without additional policy measures such as government investment, subsidies or inclusionary affordable housing requirements.

The Victorian Parliamentary Inquiry into Victoria Planning Provisions amendments also heard evidence questioning whether the planning changes would deliver genuinely affordable housing, concluding that little convincing evidence had been presented that the reforms would provide additional affordable housing.

What this means

Increasing housing capacity and increasing affordable housing are not the same thing.

Planning reforms may enable more homes to be built, but they do not determine who those homes are built for or whether they will be affordable to the households the Government says they are intended to assist.

Without stronger affordable housing mechanisms such as inclusionary requirements, government investment or other targeted interventions, there is no evidence that reducing long-standing planning safeguards will deliver the genuinely affordable housing outcomes used to justify those changes.

A question to consider

If planning deregulation does not require developers to provide affordable housing, what evidence shows these reforms will deliver the genuinely affordable homes that communities are being asked to sacrifice long-standing planning safeguards to achieve?

Key references

  • Legislative Council Environment and Planning Committee (2025). Inquiry into the Victorian Planning Provisions amendments VC257, VC267 and VC274. Parliament of Victoria, Melbourne.
  • Planning and Environment Act 1987 (Vic.), s. 3AA (definition of affordable housing).
  • Rowley, S., James, A., Gilbert, C., Gurran, N., Ong, R., Phibbs, P., Rosen, D., & Whitehead, C. (2016). Subsidised Affordable Rental Housing: Lessons from Australia and Overseas (AHURI Final Report No. 267). Australian Housing and Urban Research Institute Limited, Melbourne.

  • National Housing Supply and Affordability Council. (2025). State of the Housing System 2025. Canberra: Commonwealth of Australia.

Why has planning become the focus?

Governments at both State and Federal level have adopted ambitious housing targets and have increasingly turned to planning reform as a principal policy response.

This approach has been strongly supported by sections of the development industry, while many councils, planning professionals and community organisations have argued that planning reform alone cannot resolve Australia’s housing challenges.

Planning is one of the few policy levers governments can change directly through legislation. Planning controls can be amended, development capacity increased and approval processes streamlined relatively quickly.

By contrast, many of the factors that influence housing delivery including construction costs, labour availability, financing conditions, interest rates and market cycles require longer-term economic, fiscal or workforce policies that are less easily addressed through planning legislation.

As a result, planning reform often becomes the most visible way for governments to demonstrate they are taking action on housing.

Public debate has increasingly portrayed planning systems, councils and community opposition as the principal obstacles to solving Victoria’s housing challenges.

Government messaging reinforces this narrative

Government messaging has frequently reinforced this narrative, describing planning controls, councils and community objectors as “blockers” or “barriers” to housing, while presenting planning deregulation as a way of “opening doors” for young people and families.

This language frames the housing debate around planning, even though independent evidence suggests that many of the principal constraints on housing delivery lie elsewhere and depend on a much broader set of interacting factors.

As Professor Nicole Gurran has observed, housing targets help ensure sufficient land is available for development, but “the rest depends on market conditions.” (Councils not the housing villain as developers shelve construction. The Age – 1 May 2024 (Read)).

Planning is a safeguard, not simply a barrier

Planning is often described as a barrier to housing. We see it differently.

Good planning is a safeguard. It exists to balance housing growth with infrastructure capacity, environmental protection, biodiversity, heritage, neighbourhood character, tree canopy, public open space, climate resilience and residential amenity.

Without careful planning there is no liveability.

Planning is therefore not simply a mechanism for maximising dwelling numbers. It is the process through which governments decide what should be built, where it should be built, and how growth should be balanced with the needs of existing and future communities.

Planning timeframes do not necessarily indicate delay or inefficiency. In many cases, additional time reflects negotiations between councils, developers and affected residents to improve proposals or avoid litigation.

The current planning reforms substantially expand development opportunities while significantly reducing many of the planning safeguards that previously balanced private development rights with broader community interests.

Importantly, questioning planning deregulation is not the same as opposing housing growth.

Many Victorian councils had already identified opportunities for substantial additional housing through locally prepared housing strategies and structure plans.

The question is not whether Melbourne should grow. The question is whether removing long-standing planning safeguards is the best way to achieve that growth.

Who bears the costs — and who receives the benefits?

Planning has always involved balancing private development rights with the broader public interest. The central question is whether the current reforms maintain that balance.

The planning reforms ask established communities to accept significant changes to their neighbourhoods in the expectation that broader public benefits will follow through increased housing supply and improved housing affordability.

At the same time, rezoning and expanded development rights can substantially increase the development potential and market value of residential land, creating significant commercial opportunities for landowners and developers.

In many cases, these planning gains accrue primarily to developers, while only a relatively small proportion of the increased land value is captured for affordable housing, public open space, infrastructure or other community benefits.

This raises a fundamental question of fairness. Are the benefits and burdens of the reforms being shared fairly?

Communities are being asked to accept the loss of long-standing planning safeguards including changes to neighbourhood character, tree canopy, gardens, privacy and local amenity on the expectation that these sacrifices will deliver broader public benefits.

If planning deregulation does not ultimately deliver the housing outcomes promised, communities may bear many of the costs while receiving only a limited share of the benefits created by increased development rights.

A final question to consider

If communities are being asked to give up long-standing planning safeguards, what evidence should governments provide to demonstrate that the public benefits will justify those trade-offs?

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