From Upzoning to Delivery: The Hard Reforms Coming in 2026

With the housing crisis top of the agenda for governments of all stripes, 2025 was a year of intense policy overhaul across the country . But property professionals say that the age of reform is far from over, and 2026 will produce further shifts in development policy. The priority, experts agree, will be greenfield-enabling infrastructure —and it’s time for governments to start chipping in. Planning Institute of Australia head of advocacy Nicole Bennetts says that while governments have done good work on zoning and assessment reform , the next step is to move to a broader strategic planning focus. “It’s about focusing on how we plan, not just changing individual rules,” Bennetts told The Urban Developer . “Where you don’t do that strategic planning up front, where you don’t co-ordinate land use change with infrastructure delivery, you end up seeing homes built with no sewer. “Good strategic planning thinks about issues beyond the regulatory change. It thinks about not just the rezoning, but who’s going to fund the different aspects that are required.” Coming research from the Australian Property Institute will provide, for the first time, a survey of valuers’ perspectives on what factors are impacting feasibility and affordability. API chief executive John Winter says that he has heard reports of infrastructure costs of up to $400,000 for a single greenfield lot, making development unfeasible despite rezoning. “In the past, it was just assumed that water and power would be connected up. We even had sewage put through later, because, of course, half of Sydney was running on septic tanks,” Winter tells The Urban Developer . “The government just rolled out sewerage. Nobody was charged for the connection. It just happened. Whereas nowadays, developers are being required to put up significant contributions, which can be up to half the cost of each site. ▲ The cost and speed of supporting infrastructure is delaying housing delivery across the country. “Add that to the cost of the land and cost of development, and already your block of land in a greenfield area is nudging a million dollars. And that just doesn’t work. That’s what’s blowing the feasibility apart,” Winter says. Treating housing as essential to a functioning society will mean understanding that infrastructure connections are a social good, Winter argues, and that the costs need to be borne at a community level, not a per-lot level. “Government has to have a serious discussion about how much the cost of infrastructure to greenfield development sites is covered by the government, and therefore the community as a whole,” Winter says. “It’s not funny money—every one of us needs to contribute to this as a society. “Government isn’t a Magic Pudding of money. Government, for so long, has gone through a user-pays focus. But the user here, it can definitely be argued, is the community as a whole, because we as a community need a level of housing.” While the focus in 2025 was on upzoning and infill, independent economist Eliza Owen agrees that feasibility, and placing costs on developers through infrastructure contributions or value capture levies , is hampering the ability to take advantage of zoning reform. Governments should consider “shifting more of that onus back onto the public sector. Otherwise, you’re reducing the feasibility of developers to deliver,” Owen told The Urban Developer . ▲ Spreading the cost of infrastructure across society, via government, will be a reform priority for 2026, experts say. “I think upzoning does help, particularly around inner city precincts where you can capitalise on existing infrastructure,” Owen says. “At the same time, we really do need to still have that focus on urban fringe house and land development. One of the biggest issues for that is actually having development-ready land and infrastructure that can connect those new homes with electricity, water, sewage. “It should be a priority.” Relentless focus on productivity, labour Property Council of Australia policy executive Mathew Kandelaars says that an early return for Federal Parliament “frames a fractious year of political debate, with housing, migration, cost-of-living and national security all competing for airtime”. “Through all this, we need a relentless focus on delivery and productivity … the key reform lens for 2026 is feasibility,” Kandelaars says. States and the Commonwealth are carrying too much debt, “but we can still invest in making our cities better places in which to live and work by prioritising enabling infrastructure and lifting productivity,” Kandelaars told The Urban Developer . Labour availability and mobility will form a key part of that agenda, with continuing work being done on a Single National Market to ease the ability of tradespeople to work across state borders. Returning visiting worker numbers in the construction sector to pre-Covid levels will also help. “Global volatility and migration will have increasing domestic impacts …Migration settings and global competition for skilled labour will increasingly shape our domestic capacity,” Kandelaars says. ▲ Productivity policy will need to target attracting skilled labour and improving mobility of labour. Owen agrees that “immigration will be a big one,” and that internal migration of labour will also play a role given “productivity is definitely a global challenge”. “Policies that allow the mobility of labour … anything that allows us to streamline the qualifications and get that labour ready to be on-site more quickly,” she says. “Construction costs have spiked since the pandemic in many major Western economies. We’ve seen a very similar trend in the US and Canada and in New Zealand as well, and a lot of it has been due to additional pressure on materials and a surge in wages. “So any processes to help make construction less labour-intensive could potentially help with increasing the delivery of supply,” Owen says, pointing to modern methods of construction such as modular homes . Bennetts believes planning will follow a similar agenda, with a shortage of planners being alleviated by increasing takeup of digital tools. “Reform has to include better data,” Bennetts says. “South Australia is leading the way in some of this work. The land supply dashboard that they’ve released is best practice, and it’s a great tool which communicates clearly about how housing supply is tracking. “They’re also doing some really good work with AI, which we’re closely monitoring. There are other councils and state governments also doing that. The Sunshine Coast Council is an example; they’ve fed an AI model their planning scheme.” ▲ More data and greater coherence across jurisdictions will help planners understand the impacts of policy and guide reforms. While Australian Bureau of Statistics monthly building approvals are a useful dataset, Bennetts hopes that Economic Reform Roundtable initiatives will also result in better tracking of planning approvals. “We often say that planning systems can’t be improved if they’re not being measured … we’re hoping that translates into really tangible metrics that can identify the real bottlenecks in the system.” Environment, investment reform The reforms to the Environment Protection and Biodiversity Conservation Act, passed in November after years of debate over the Samuel Review, have not drawn a line under environmental regulation. Submissions to the National Environmental Standards, which will help clarify and codify how the EPBC Act actually functions, are open until January 30. While the top-level philosophy that guides environmental approvals is now visible, the details in practice will be hammered out in 2026. And expect ongoing scrutiny beyond the statutory 10-year reviews, with increased monitoring and reporting on the success of the Act. Treasurers have also put standardised approval pathways on their reform agenda for 2026, with some jurisdictions currently considering the emerging asset class a utility, or infrastructure. Land, water and energy use will be a key focus. Property investment is also set for further tinkering in 2026 , with Kandelaars telling The Urban Developer that “better investment settings will support long term capital attraction and growth”. ▲ Policymakers should be encouraging investment while protecting the financial system from shocks and threats. “That’s how you support new housing supply, major precincts, data-enabled infrastructure, and the kind of city-shaping projects governments can’t fund alone,” Kandelaars says. “If we want institutional investors from overseas to partner with great Australian businesses, then we need stable rules, competitive tax settings, and predictable regulation. This will also help governments pay down debt.” Winter says that issues around risk allocation in contracts and insolvencies in construction are not as front of mind as a few years ago. But regulation should get ahead of a potential Minsky moment, or unravelling of leverage in the financial system, similar to the GFC. “We’ve had a long and successful run in our property sectors. It’s been a long time since we had significant downturn, particularly in resi property, but we have to, as a system, be prepared and protected for that to occur,” Winter says. “We need to make sure that policy around that is sufficiently informed that we don’t end up with a run on our banking system because of poor lending practices. “Because everything doesn’t always go up—and you’ve seen a bit of that in the office sector.”

From Upzoning to Delivery: The Hard Reforms Coming in 2026

2026 Developer Outlook Lunch | Sydney

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