Are we trading green homes and liveable neighbourhoods for housing targets?

Australia freezes environmental building standards until 2029 to meet housing targets, but experts warn this risks creating unsustainable communities that lock in decades of problems.

The Albanese government’s decision to freeze environmental updates to the National Construction Code (NCC) until 2029 highlights the uncomfortable trade-offs policymakers face when trying to balance environmental standards, housing quality, and urgent supply needs in a market falling well short of requirements. Importantly, the pause applies only to environmental standards – safety-related provisions will continue to be updated.

Australia needs to build 1.2 million homes over five years – a target the country has never achieved. With construction times blowing out from 6 – 7 months to over 10 months and costs remaining elevated despite recent moderation, the government is betting that removing regulatory complexity will unlock supply. But this approach raises troubling questions about what kind of housing we’re creating for future generations.

The stakes are high because housing decisions create legacies that endure for decades. When homes typically last 50 – 100 years, building poorly or in the wrong locations locks in problems that span generations. Unlike other infrastructure, you can’t simply demolish whole suburbs and start again when planning mistakes become apparent.

Since announcing the 1.2 million target, states have scrambled to implement planning reforms under pressure from federal incentive schemes. The government offers $15,000 per dwelling above baseline targets, but only if states meet planning reform commitments.

NSW now pays councils up to $11,000 per dwelling for hitting housing targets while implementing medium-density bonus schemes. Victoria has introduced infrastructure contribution rebates tied to housing delivery. Western Australia has modified its residential codes to allow more infill development.

The challenge is these reforms often create a two-tier system. Affluent areas with strong community voices successfully resist density increases, while outer suburbs bear the brunt of rapid development. New housing gets pushed to urban fringes with poor transport links, limited amenities, and questionable long-term liveability.

At the federal level, the government is also moving to fast-track environmental approvals. A new “strike team” in the Environment Department will prioritise assessments for more than 26,000 homes, with the aim of cutting delays while still meeting statutory requirements. Broader reform of the EPBC Act is also in train, with changes expected in 2026.

Growing appetite for corporate solutions deserves careful consideration. Following the Economic Roundtable, the government announced plans to work with the corporate watchdog to allow super funds to invest more in housing, potentially delivering 35,000 properties. Alongside this, the government is reviewing superannuation rules – including the performance test and RG97 reporting standards – to enable funds to channel more long-term capital into housing and clean energy projects.

While some criticise individual investors as greedy, institutional ownership doesn’t necessarily solve this problem. Large institutions are equally profit-motivated and often require higher returns than individual investors to justify the investment to their stakeholders. Some institutional ownership can diversify the rental market and bring professional management standards, but the scale matters enormously.

America’s experience shows what happens when corporate ownership goes too far – large companies now own tens of thousands of properties, pricing out traditional homebuyers and creating a permanent renter class. The risk is that developments optimised for institutional returns rather than community needs could replicate these problems locally.

The real opportunity continues to lie in transforming construction methods—something that doesn’t require relaxing environmental standards or planning rules. This isn’t “assemblable houses on trucks” but sophisticated elemental prefabrication of components like trusses, wall panels, and floor cassettes in controlled factory environments.

This approach addresses the 90,000-worker shortage by concentrating skilled labour efficiently rather than coordinating trades across multiple sites. The government has allocated $54 million for prefabricated housing and is exploring new technology, including AI tools to help tradies, builders, and homeowners navigate the complex NCC. Yet innovation in building methods remains underexplored compared to regulatory relaxation.

The risk in rushing to meet targets is creating communities that are neither sustainable nor liveable. Freezing environmental standards might boost short-term supply but could lock in decades of energy-inefficient housing requiring costly future retrofits. Pushing development to poorly serviced areas provides immediate options while creating long-term infrastructure and social costs.

Australia’s housing challenge demands solutions that address supply constraints without sacrificing sustainability or liveability. The construction code freeze represents a short-term measure to simplify delivery, but long-term success requires coupling this with innovation in building methods and resistance to false choices between quantity and quality.