The Missing Middle: Brisbane’s Two Storey City Is No Longer Affordable

Brisbane’s housing affordability crisis is often framed as an unavoidable consequence of population growth, rising construction costs, or strong interstate migration. But a growing body of evidence suggests the crisis is not inevitable. It is, to a large extent, the result of deliberate planning choices that have restricted how many homes can be built, and where.

The Grattan Institute’s 2025 report, More homes, better cities: Letting more people live where they want, makes a clear argument that Australia’s housing crisis is fundamentally a supply problem in well located urban areas. For Brisbane, the findings are particularly confronting. Despite rapid growth and strong demand, the city has locked up most of its residential land behind zoning rules that only allow very low density housing.

According to the report, three quarters or more of residential land in Brisbane is zoned for two storeys or fewer. This is not an outer suburban phenomenon. These controls apply across much of the inner and middle ring, including areas close to jobs, schools, public transport, and major activity centres. The result is a city that has grown quickly in population, but not nearly fast enough in housing supply where people actually want to live.

This mismatch has consequences. Brisbane house prices have risen sharply since the pandemic, while rents have increased by more than 50% on newly advertised properties. Vacancy rates remain tight, and younger households are increasingly locked out of inner and middle suburbs. The Grattan Institute notes that states which built the fewest homes per new resident during and after the pandemic experienced the fastest rent growth. Queensland sits firmly in that category.

What makes Brisbane’s situation more frustrating is that demand for more diverse housing already exists. Many residents would prefer to live in townhouses or apartments in established suburbs rather than detached houses on the fringe, if those options were available at reasonable prices. Yet the planning system largely prevents that choice. Instead, limited areas that do allow medium or higher density attract intense development pressure, while surrounding suburbs remain effectively frozen.

Brisbane’s character zoning regime amplifies this problem. Large parts of the inner city are subject to pre 1947 character controls that require the retention of older housing and mandate that new development reflect existing streetscapes.

The Grattan Institute highlights that these controls apply to nearly 13% of Brisbane’s residential zoned land and cover many of the most desirable inner suburbs. While heritage protection has a legitimate role, the report argues that broad based character controls significantly restrict townhouse and apartment development, even in areas officially earmarked for increased density.

The cumulative effect of these policies is a planning system that says no by default. Even where housing is technically permitted, layers of controls around height, setbacks, site coverage, and discretionary assessment make development slow, costly, and uncertain. The report notes that planning approvals for multi dwelling projects can take close to a year in some states, with subjective criteria such as neighbourhood character adding further risk.

These barriers translate directly into higher housing costs. The Grattan Institute estimates that restrictive planning controls add hundreds of thousands of dollars to the cost of new housing in Australia’s capital cities. In Brisbane, this means fewer homes delivered, higher land values per dwelling, and prices that continue to rise faster than incomes.

One of the most important ideas in the report is that Brisbane cannot build its way out of the crisis solely by expanding outward. Greenfield development remains part of the solution, but it does little to address affordability in areas close to employment and infrastructure. Pushing growth further to the fringe increases infrastructure costs, lengthens commutes, and reduces access to high paying jobs. Over time, this undermines the city’s productivity and livability.

Instead, the Grattan Institute argues that Australian cities need to fundamentally change what is allowed in established suburbs. A central recommendation of the report is that three storey townhouses and apartments should be permitted on all residential land in capital cities. This form of low rise density, often described as the missing middle, can deliver large numbers of homes without radically changing neighbourhood character.

The report also calls for a more ambitious approach around transport. It recommends that land within walking distance of train stations, bus rapid transit corridors, and key commercial centres should be up-zoned to allow at least six storey residential development. The logic is simple. These locations already have infrastructure, services, and transport capacity, making them ideal places to accommodate more people. For Brisbane, this has direct implications for suburbs along the rail network and the busway system, which functions as a form of high capacity public transport comparable to light rail in other cities.

Allowing six storey density around stations and bus rapid transit corridors would significantly increase housing supply in the most accessible parts of the city. It would also support better use of public transport, reduce car dependence, and shorten commutes. The Grattan Institute argues that concentrating density in these locations delivers economic and environmental benefits while minimising broader impacts.

Crucially, the report stresses that these changes do not require high rise towers everywhere. Many overseas cities achieve far higher densities with mid rise buildings that remain human scale and integrate well into their surroundings. Brisbane’s resistance to modest density is therefore a policy choice, not an inevitability.

Beyond zoning, the report emphasises the need to simplify approval pathways. Developments that meet clear standards should be able to proceed without discretionary assessment or public notification, particularly for low rise housing. For Brisbane, expanding deemed to comply pathways could unlock smaller scale infill projects and reduce reliance on a narrow pipeline of large developments.

The broader message of the report is that housing affordability cannot be fixed at the margins. Without allowing significantly more homes in well located parts of Brisbane, price pressures will persist regardless of construction subsidies or fringe land releases. The Grattan Institute estimates that nationally, planning reform could increase housing construction by tens of thousands of homes per year, reduce rents by around 12% over a decade, and cut more than $100,000 from the median home price. It also estimates long term economic gains of up to $25 billion per year.

That national case is reinforced locally by a recent review from Greater Brisbane, authored by Travis Jordan with Alex Jago and Rob Lucas, examining Brisbane City Council’s proposed changes to the Low-Medium Density Residential Zone. While the group supports the intent of reform, it argues the scale of change is far too modest to materially improve affordability. Council estimates the changes could enable around 6,000 additional homes by 2032, but Greater Brisbane notes this would be marginal in a city where more than 70 per cent of residential land remains effectively limited to two storeys or fewer, including large areas close to jobs and public transport.

Greater Brisbane’s analysis shows that decades of restrictive zoning, character controls, and townhouse bans have locked up housing capacity across Brisbane, even in high-amenity inner and middle suburbs. Crucially, the review emphasises that small zoning changes rarely translate into real supply. Drawing on Grattan Institute modelling, the authors note that for every 100 homes theoretically enabled through zoning changes, only around one is typically built each year. This means reforms must unlock very large amounts of zoned capacity if they are to deliver meaningful improvements in housing affordability.

Greater Brisbane, led by Travis Jordan, argues Brisbane needs bolder, city-wide reform if affordability is to improve. Recommendations:

2026-01-Low-Medium-Density-Residential-Zone-review

For Brisbane, the choice is increasingly stark. The city can continue to protect low density zoning and character controls that benefit a shrinking share of residents, or it can reform its planning system to reflect the needs of a growing and changing population.

Brisbane’s affordability crisis is not unsolvable. But it will not be fixed without confronting the planning settings that created it.