Discussion paper

Planning deregulation, housing supply and affordability: what if land markets are monopolies?

Urban planning Zoning Affordable housing Housing supply Deregulation Australia

Planning deregulation, especially rezoning, has been repeatedly touted as a key policy solution to Australia’s eye watering house prices. 'Planning constraint' is cited uncritically by housing economists and 'rezoning' championed as the solution.

The story goes that prices remain high because the supply of new dwellings in accessible, desirable locations has not kept pace with demand. The authors contend that there are different conceptual models of land rent deployed within the debate over planning deregulation, housing supply and housing affordability. Where the conceptual model is incomplete, it conflates the impacts of rezoning with the impacts of dwelling completion, and obscures the behaviour and incentives of the market when it comes to actual building. Despite the fact that rezoning can entail massive windfall gains to existing landholders, in general, there has been very little acknowledgement of the political-economy of private rent capture through unpriced rezoning. 

The aim of this discussion paper is to clarify and communicate the current debate and scholarship on this topic, as well as outlining an agenda for future research.

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