How Melbourne beats Sydney on housing crisis solutions

February 25, 2026 — 5:01am

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The NSW government has not prioritised the best type of residential development to deal with Sydney’s housing shortage and should follow Victoria’s blueprint to fix the crisis, a leading think tank says.

Analysis by the Grattan Institute shows the most feasible housing option across Sydney’s established suburbs is three-storey townhouses and other forms of “gentle” density.

But that is “precisely the housing typology that NSW has not allowed enough of” under recent planning reforms, said Brendan Coates, a Grattan Institute economist and co-author of the research.

“The missing piece of the puzzle in Sydney is that it forbids a lot of the gentle density now allowed in Melbourne,” he said. “Our work shows gentle density like townhouses most likely to be commercially........

© The Sydney Morning Herald