New independent research supports HIA call for lot size reform

New Australian research has provided further evidence that relatively simple planning reforms can deliver meaningful increases in housing supply, the Housing Industry Association (HIA) says.

The research paper, What Local Land Use Reform Does, and Doesn’t Do, published by the e61 Institute and the Centre for International Economics, examined planning reforms in Adelaide’s City of Campbelltown and found that reducing minimum lot size requirements increased housing approvals by 67 per cent, with the additional supply largely delivered through townhouses and row housing.

The findings have prompted the HIA to renew calls for minimum lot size reform across Australian cities, arguing that outdated planning controls continue to suppress both supply and affordability.

“New Australian research has reinforced concerns that minimum lot size requirements, many of which were introduced to address planning challenges from a very different era, continue to hold back housing supply today,” said HIA Executive Director Planning & Development, Sam Heckel.

The research aligns with HIA’s own recent analysis. Its Increasing Gentle Density: Unlocking Subdivision report identified minimum lot size controls as a major barrier to housing supply, finding that a conservative reduction in those minimums could reduce the cost of a new home by more than $200,000 through lower land costs alone.

For context, Australia is already projected to fall well short of the National Housing Accord target of 1.2 million homes — a shortfall that Heckel says makes planning reform more urgent than ever.

“At a time when governments are struggling to meet ambitious housing targets, many planning schemes continue to impose minimum lot size requirements that limit housing supply and housing choice,” he said.

“The impact is not just fewer homes. Restrictive lot size controls often prevent the delivery of smaller and more affordable housing options that can provide an entry point into established suburbs for first home buyers, downsizers and key workers.”

The Campbelltown findings are particularly significant because they demonstrate a direct causal link between planning reform and development activity — a connection that housing advocates have long argued but that has been difficult to quantify at a local government level.

Heckel said the results challenge arguments that constraints on new housing supply are primarily driven by industry capacity limitations.

“Importantly, this new independent research also demonstrates that when planning barriers are removed, industry responds. The issue is often not a lack of industry capacity, but the planning controls that limit what can be built,” he said.

The HIA’s position is that large portions of Australia’s major cities remain subject to lot size requirements that are no longer fit for purpose.

“Large parts of Australian cities remain subject to lot size requirements that no longer reflect modern housing needs,” Heckel said.

The research adds to a growing body of evidence pointing to planning system inefficiency as a central driver of Australia’s housing shortfall. Reports from the Productivity Commission, state-based planning reviews, and multiple federal inquiries have all recommended greater housing diversity and more efficient use of residential land — yet the HIA argues implementation has lagged.

“There is no shortage of reports, reviews and policy proposals recommending greater housing diversity and more efficient use of residential land,” Heckel said.

“What is often missing is the urgency required to translate those recommendations into tangible housing outcomes for Australians struggling to find a home.”

The HIA is calling on state and territory governments to treat minimum lot size reform as a priority policy lever, particularly given the relatively low cost and high impact of such changes compared to broader infrastructure or funding commitments.

“Australia is already projected to fall well short of the National Housing Accord target of 1.2 million homes,” Heckel said. “If governments are serious about improving affordability and increasing supply, they must be prepared to reform outdated planning controls that prevent land from being used more efficiently.”