The Productivity Commission has released its interim report into housing supply regulation, and it’s a worthwhile read for anyone involved in property development.

What we appreciated most wasn’t any single recommendation, it was the way the report acknowledges how new housing is actually delivered in Australia.

As property economist Michael Matusik recently noted, “Approximately 96% of new housing in Australia is financed and delivered by the private sector. Governments regulate the process and provide enabling infrastructure, but private developers, builders, financiers and investors determine whether projects proceed. Unless those projects generate acceptable commercial returns, they simply will not be built.​”

Too often the conversation focuses solely on demand or affordability, without recognising that someone still has to take the financial risk to deliver a project. If a development isn’t commercially viable, it simply won’t proceed, and no amount of demand changes that.

The report doesn’t suggest removing regulation altogether. It recognises that planning controls and approvals play an important role, but also argues there is room to make the system more efficient without compromising good outcomes.

Many of the proposed reforms are common sense. Better coordination between infrastructure and housing. Faster and more predictable approval pathways. Planning systems that make it easier to deliver homes where they’re needed most.

Anyone who works in development knows that delays and uncertainty don’t just slow projects down, they can stop them altogether. Holding costs continue to rise, finance becomes more challenging, and what was once a viable project can quickly become unworkable.

That’s why this report is encouraging. It acknowledges that governments, councils and the private sector all have a role to play if Australia is going to deliver more homes.

This is only an interim report, with further consultation to take place before the final recommendations are released. But it feels like a positive step in the right direction and, hopefully, the beginning of a more balanced conversation about housing supply.

The challenge isn’t simply building more homes. It’s creating an environment where those homes can actually be delivered.