Housing must not be collateral damage of data centres, HIA warns

The Housing Industry Association (HIA) has welcomed the Prime Minister’s acknowledgement that housing must remain a central consideration as Australia expands its data centre capacity, but warned that the rapid growth of digital infrastructure risks displacing homes and straining the resources needed to deliver them.

HIA Chief Executive Industry and Policy Simon Croft said while data centres have a role to play in Australia’s economic future, they must not come at the expense of housing supply.

“While data centres may play an important role in Australia’s economic future, governments must not lose sight of the country’s most urgent challenge – delivering enough homes for a growing population,” Mr Croft said.

“Australia needs both homes and digital infrastructure but the rapid expansion of new data centres should not come at the expense of boosting supply of new housing.”

Mr Croft said competition for land, electricity, water and infrastructure is already intensifying at a time when governments are struggling to deliver the housing supply needed to improve affordability. He pointed to concrete examples where housing projects have already been displaced.

“There are examples in states such as Victoria and New South Wales, where land previously earmarked for housing is being fast-tracked for data centre development,” he said.

“The preferential planning treatment afforded to some data centre projects should also be called out. While we have no objection to this type of development, housing should be afforded the same urgency.”

The association said the imbalance in planning processes has reached a point where speed of approval for digital infrastructure far outpaces that for residential development.

“Under fast-track planning mechanisms, it is entirely conceivable that a data centre spanning many hectares could be approved faster than a single home,” Mr Croft said.

“Families looking for a home should not find themselves behind data centres in the queue for land, energy connections or essential infrastructure.”

The HIA said the issue is particularly acute in growth corridors and regional hubs, where housing developments are already facing delays due to infrastructure constraints. The association has called for greater scrutiny of the significant energy and water demands associated with large-scale data centre developments and how those impacts are managed alongside community and housing needs.

Mr Croft drew a sharp contrast between the regulatory burden placed on residential construction and the resource consumption of large-scale data facilities.

“Over recent decades, the cost of housing has been ratcheted up by successive changes to building and energy efficiency requirements, designed to reduce household water and energy consumption,” he said.

“At the same time, a single large-scale data centre can consume resources equivalent to tens of thousands of homes.

“Unless these impacts are properly managed and offset, there is a real risk that households will face even greater pressure to reduce consumption through additional costs and regulatory requirements.”

The HIA welcomed the Prime Minister’s comments about data centres doing the heavy lifting on their electricity and water use, and called on the Federal Government to ensure National Cabinet backs that principle with action.

“We welcome the Prime Minister’s comments about the importance of data centres doing the heavy lifting when it comes to their electricity and water use and strongly encourage the Federal Government to push this principle forward and ensure National Cabinet supports it in both words and actions,” Mr Croft said.

The association did not oppose Australia embracing artificial intelligence and emerging technologies, noting their growing application within the residential building industry. Mr Croft described AI as a valuable productivity-enhancing tool for many parts of the building sector and said Australia should be at the forefront of adoption.

However, he said that progress must come with appropriate safeguards.

“But we must not move forward without asking important questions and establishing sensible boundaries to ensure the nation’s housing needs are not compromised,” he said.

“HIA is urging governments to ensure planning, infrastructure and investment decisions support a balanced approach that delivers both housing and economic growth, without compromising Australia’s ability to provide enough homes for its growing population.”