The role and significance of planning in the determination of house prices in Australia: Recent policy debates

Abstract

On the world stage, Australian cities have been punching above their weight in global indexes of housing prices, sparking heated debates about the causes of and remedies for, sustained house price inflation.

This paper examines the evidence base underpinning such debates, and the policy claims made by key commentators and stakeholders.

With reference to the wider context of Australia’s housing market over a 20 year period, as well as an in-depth analysis of a research paper by Australia’s central Reserve Bank, we show how economic theories commonly position land use planning as a primary driver of new supply constraints but overlook other explanations for housing market behavior.

In doing so, we offer an alternative understanding of urban housing markets and land use planning interventions as a basis for more effective policy intervention in Australian and other world cities.