Capital cities starting to find their missing middle

In a promising development for Australia’s housing market, new data from the Housing Industry Association (HIA) indicates a burgeoning trend towards ‘gentle density’ in several states. This shift could provide a crucial solution to the nation’s ongoing housing crisis by increasing the supply of medium-density dwellings in urban areas.

Sam Heckel, Executive Director of Planning at HIA, emphasised the importance of this trend in addressing the housing shortage. “Australia’s housing crisis won’t be solved without increasing medium density dwellings, particularly in our larger cities. ‘Gentle density’ projects such as townhouses, duplexes and terrace homes, can deliver more homes faster and at prices people can afford,” he stated.

The HIA has been a long-time advocate for housing diversity, arguing that the ‘missing middle’—medium-density housing options—has been overshadowed by the prevalence of detached homes and high-rise apartments. Heckel explained, “HIA has long argued that increasing housing diversity is essential, however, this missing middle has been progressively hollowed out, with detached homes or apartments dominating much of the new housing stock.”

The concept of gentle density is seen as a bridge between the extremes of housing types, offering a blend of affordability and lower density. This approach is gaining traction in several states, with Western Australia leading the way with a remarkable 63% increase in such developments. South Australia follows with a 36.7% rise, Queensland at 26.2%, and New South Wales at 18.8%.

Heckel highlighted New South Wales as a standout performer, largely due to its innovative approach to housing design approvals. “We expect New South Wales to continue to be a standout, with its recently released ‘pattern book’ of pre-approved housing designs streamlining approvals and cutting red tape. By giving builders and landowners pre-endorsed designs, they’re providing the certainty the industry needs to unlock smaller, smarter projects,” he noted.

This pattern book initiative is seen as a model for other states to emulate, as it simplifies the approval process and provides a clear pathway for the development of medium-density housing. Heckel urged other regions to consider similar reforms, stating, “It’s exactly the sort of practical reform other states should adopt if we’re serious about tackling the housing shortage. With rising building and planning costs for apartments and new greenfield development stalled by infrastructure and environmental barriers, gentle density is a vital solution for governments to meet housing targets.”

Despite the promising data, the HIA warns that planning rules in many areas still pose significant challenges to the development of smaller-scale projects. Currently, up to three-quarters of residential land is zoned exclusively for single houses. Even where gentle-density housing is allowed, it often faces the same lengthy approval processes as more complex, larger projects.

Heckel pointed out the obstacles posed by local councils, saying, “Councils are regularly adding larger setbacks, deep-planting requirements and parking minimums that, while well-intentioned, render many projects commercially unviable.”

To overcome these barriers, the HIA is advocating for a review of planning systems across all jurisdictions. Heckel concluded with a call to action: “HIA is calling on all jurisdictions to review their planning systems and fast-track measures that support gentle density, ensuring more Australians can access well-located, affordable homes sooner.”

As the housing crisis continues to challenge policymakers and developers alike, the rise of gentle density offers a glimmer of hope. With strategic reforms and a focus on medium-density solutions, Australia’s cities could begin to address the pressing need for more affordable and diverse housing options.