Nicholas Spiro

The View | Why Japan is the envy of Australia’s desperate housing planners

Unlike in Japan, Australia’s restrictive planning rules and housing policy constrain the market’s ability to respond to rising demand

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Newly constructed blocks of flats in the Sydney suburb of Mascot are seen on June 16. Addressing the chronic issue of housing affordability in Australia has been hampered by what some see as overly restrictive planning and zoning laws. Photo: AFP

Nicholas Spiro

Published: 3:30pm, 15 Jul 2024Updated: 4:40pm, 15 Jul 2024

In many countries, the affordability of housing is at the top of the political agenda. While views differ on whether supply-side factors are more important than demand-side ones, there is broad agreement that zoning and planning laws which restrict supply make housing more expensive. While this is a boon for homeowners, it imposes a huge burden on renters and those struggling to get on the property ladder.

The failure to build enough homes was a big issue in the recent parliamentary election campaign in Britain. Prime Minister Keir Starmer, the leader of the Labour Party which won a landslide victory, pledged to “take on the Nimbys” – people who do not mind new development as long as it is “not in my backyard” – and take the side of the “builders, not the blockers”.

The scale of the challenge facing Starmer is daunting. Britain is one of several large economies in the developed world where the number of homes per capita has barely changed since 2000. However, according to data compiled by the Grattan Institute, Australia is in an even worse position, having experienced the second-biggest decline in housing stock per person aged over 20 since the turn of the millennium.

Japan, by contrast, witnessed the sharpest increase. Even if one takes into account that Japan’s population has been falling since 2010, the pace of housebuilding is remarkable. In Tokyo, the housing stock tripled in size between 1963 and 2013, according to data from James Gleeson of the Greater London Authority.

While several factors are at play, the most important one is that the national government exerts much more control over zoning and building rules than is the case in other leading economies. The planning system became more centralised in recent decades as “broad public interest in abundant housing trumped parochial housing obstructionism,” the Sightline Institute notes.