Master Builders Australia analysis says new home builds in Canberra have fallen by 50 per cent

About 2660 homes are expected to have started construction in the territory by the end of this financial year, an analysis from Master Builders Australia has concluded.

This is a drop from 5865 on the previous year with the analysis warning the ACT is likely to have a shortfall of more than 7000 homes over the next five years.

It has prompted Master Builders ACT to call on the territory government to change zoning laws to allow for dual occupancies and other multi-dwelling developments on low density RZ1 blocks.

The analysis by Master Builders Australia says the ACT has to build between 5800 and 6380 homes each year to meet targets under an agreement between the Commonwealth and states and territories.

The National Housing Accord aims to build one million new homes across the nation over five years from 2024 in an attempt to tackle the deepening affordability crisis.

Master Builders ACT chief executive Michael Hopkins said the stark shortfall experienced this year was due to increasing interest rates, slow land release and outdated planning rules.

He said the government seriously needed to consider changes to RZ1 zoning to encourage more housing types as part of the ongoing planning reforms.

"We should be thinking much more boldly around how to encourage a whole range of different housing types in RZ1 zones. Everything from granny flats, teenagers retreats, housing above garages, dual occupancies, three units on a site, four units on a site and even small townhouses," Mr Hopkins said.

"But we seem to have locked into the planning rules this 1960s style housing, which is really what was built in the suburbs originally has been preserved in the planning rules and they haven't moved with the changing needs."

RZ1 blocks are low density and only one dwelling is permitted unless the block is more than 800 square metres where a dual occupancy is allowed but it cannot be separately titled.

The Legislative Assembly is currently considering a new planning bill, which would replace the current strict rules-based system with one focused on outcomes.

Concurrently, the government is consulting about changes to the territory plan and planning rules for different districts. As part of this the government is asking for advice on whether there should be changes to RZ1 zoning.

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The ACT government has come under fire from the opposition over recent years who have repeatedly called on the government to provide more land, particularly more single residential blocks.

The Canberra Liberals have attacked the government's urban infill target of having 70 per cent of new properties built within existing areas.

The Master Builders analysis noted the ACT was the only jurisdiction where detached housing accounted for fewer than half of new home starts.

But Mr Hopkins said debate needed to focus on how more housing could be provided in existing areas.

"There's certainly a role for expansion into new greenfield areas for single residential housing but what we would like there to be more debate around is what we can do in those established areas," he said.

In response to the Master Builders ACT release, an ACT government spokeswoman said planning reforms would focus on allowing medium density properties.

"There is no doubt that planning reforms are integral to increasing housing supply where people want to live and delivering the government's objective of gentle urbanism," the spokeswoman said.

"What is required is a steady and orderly planning reform program, with an expanded focus on new medium density dwellings such as townhouses, terraces, villas, duplexes and dual occupancies.

"A growing city needs a variety of housing choices to meeting changing demographic needs. We are committed to improving housing access, affordability and choice. Delivering more housing close to transport, to jobs and to public services."

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