This research examined the barriers and challenges within the housing system for delivering housing supply that is more diverse in terms of size and built form; tenure; development model; and affordability level.
Local land-use zoning can have a significant impact on whether diverse housing types are permitted in residential areas, as well as whether medium-density housing is financially viable. Where zoning allows for apartment buildings, land prices are typically higher, meaning that medium-density housing forms, including townhouses, are not financially viable.
Access to finance and finance costs are a particular challenge for projects that include unique housing products or tenure arrangements as lenders perceive them to be higher risk. Lack of comparable dwelling types can also be a problem for accurately valuing diverse housing products.
Barriers to innovation also exist as the larger developers who dominate the development industry can be averse to economic risk and slow to change their housing products. Smaller developers may be more agile but can face challenges in scaling up their production. Innovation is also hindered by lack of necessary skills and experience within the housing development industry.
There is an opportunity for governments to initiate and extend more approaches, including leadership in articulating the need for different dwelling types, housing tenures and development models; support for suppliers interested in delivering diverse housing products; and proactive measures to subsidise and de-risk projects that deliver affordable housing for low-income and moderate-income groups.