A new report from the Grattan Institute has reignited the debate on housing affordability and the role of planning reform in solving Australia’s housing crisis. The message is simple – if we build more homes where people want to live, prices and rents will fall.
According to the report, if all capital cities were rezoned to allow three-storey housing across residential areas, and up to six storeys near transport hubs, rents and house prices could be 12 per cent lower within a decade. That translates to an average saving of around $1,800 per year for renters and $100,000 off the median home price.
For construction businesses, this represents both an opportunity and a challenge.
For years, Australian cities have built plenty of new homes at the edges and the very centre – but very little in between. The Grattan Institute calls this the “missing middle”: the medium-density housing that sits between detached homes and high-rise towers.
Terraces, three-storey townhouses, and small apartment blocks are common across Europe and parts of Asia, but relatively rare in Australian suburbs. The report argues that restrictive local planning rules and inconsistent council approvals have made this type of development slow, expensive, and often unviable.
If governments adopt the proposed reforms – allowing medium-density development by default – it could open up a new layer of projects across the metropolitan areas of Sydney, Melbourne, Brisbane, Adelaide, and Perth.
For construction businesses already positioned to scale, this could become one of the most significant shifts in the market over the next decade.
The Grattan Institute’s proposal would not only boost demand for new housing projects, it would also reshape how those projects are delivered.
Mid-sized builders, subcontractors, and developers could find themselves competing for a wave of small-to-medium townhouse and apartment projects that require tighter financial management, better coordination, and stronger governance. These projects are typically too complex for small residential builders, but too small to attract the major players.
That creates a gap – and an opportunity – for well-run, well-financed construction companies with strong systems and commercial discipline.
But to seize that opportunity, businesses will need to be ready.
At Xact Accounting and Advisory, many of our clients in the construction sector are already preparing for this shift. They’re strengthening their financial structures, improving reporting cadence, and building teams that can manage multiple concurrent projects without losing sight of profit and cash flow.
Those that succeed share a few common traits:
While the policy discussion focuses on planning approvals, the reality on site is different. Builders are still facing material price pressure, slow council processes, and persistent skilled labour shortages.
In other words – even if the reforms pass, Australia still needs enough capacity to build the homes.
The Housing Industry Association estimates that over a million new homes will need to be delivered by 2029 to meet the federal government’s target. That will test every part of the construction ecosystem – supply chain resilience, workforce availability, and financial stability.
For construction businesses, that means now is the time to strengthen systems, rebuild capability, and prepare for scale.
The Grattan Institute’s report is ultimately optimistic. It shows that Australia’s housing crisis can be eased with smarter planning and faster approvals. But it also exposes how dependent success will be on the construction industry’s ability to deliver efficiently and profitably.
For construction business owners, this is a clear signal: those who professionalise now will be in the strongest position to take advantage of the coming shift.
At Xact, we work with construction businesses across Australia to help them scale with confidence – building the financial visibility, operating structure, and leadership discipline that allow them to grow sustainably.
Whether planning reforms arrive next year or the year after, the market is already moving in that direction. The opportunity belongs to those who are ready.
If your construction business is preparing for this next wave of demand, now is the time to professionalise your financial structure and operating rhythm. At Xact, we help construction businesses build the systems, governance, and financial clarity needed to scale with confidence.
If you want to get ready for what planning reform will unlock, we can help you strengthen the foundations now.
Book a consult today to see how we can support your growth and help you stay ahead of the market.
