GLOBAL - A groundbreaking report released on Wednesday, 5 November 2025, by the Grattan Institute, an independent Australian think tank, has proposed a radical overhaul of urban zoning laws that it claims could reduce home prices by over AUD $100,000 (approx. KES 8.5 million) within a decade. The proposal, which calls for allowing three-storey townhouses and apartments to be built on all residential land, is designed to combat Australia's severe housing affordability crisis by unlocking a massive new supply of homes. This bold, supply-focused strategy from a developed nation offers a compelling case study for Kenyan policymakers and urban planners grappling with a similar, and arguably more acute, housing crisis.

Kenya faces an estimated annual housing demand of 250,000 units, with supply lagging at only 50,000 units, creating a cumulative deficit of over two million homes. This shortfall disproportionately affects low-income households and fuels the expansion of informal settlements, where over 60% of Nairobi's population resides. The Kenyan government's Affordable Housing Programme (AHP) aims to construct 200,000 units annually, but has faced challenges in meeting this ambitious target. As of early November 2025, the government reported that 3,171 units were complete, with over 160,000 in various stages of construction.

The Australian Proposal: A 'Housing Policy Revolution'

The Grattan Institute's report, titled "More homes, better cities," argues that decades of restrictive zoning have failed to provide enough housing where people want to live, particularly in major cities like Sydney and Melbourne. Brendan Coates, the institute's housing and economic security program director, stated, "For decades, Australia has failed to build enough homes in the places that people most want to live... Now we have a housing affordability crisis that is dividing families and communities." The report's modelling suggests that simply permitting medium-density, three-storey developments across all residential land could add more than one million homes in Sydney alone and boost national housing construction by up to 67,000 homes per year.

This approach directly confronts "NIMBY-ism" (Not In My Back Yard), where existing residents oppose new developments. The institute's research indicates that restrictive zoning—such as rules limiting large swathes of residential land to single-family homes—artificially inflates property values. By liberalizing these rules, the market could respond more effectively to demand, increasing supply and, consequently, making housing more affordable for younger generations and renters.

Parallels and Lessons for Nairobi

The challenges outlined in the Australian report resonate strongly with the situation in Nairobi. Kenya's capital operates under zoning ordinances that have been criticized as outdated and restrictive, hindering the development of diverse and affordable housing options. These regulations often favor low-density, single-family homes in well-serviced areas, pushing affordable, high-density developments to the urban periphery where infrastructure is lacking. The Nairobi City County government has acknowledged the need for reform, with ongoing efforts to update its development control policies to manage rapid urbanization. In September 2025, the Court of Appeal directed the county government to finalize a comprehensive zoning plan within six months, calling the existing guidelines obsolete.

Adopting a strategy inspired by the Grattan Institute's proposal could align with the goals of Kenya's AHP. By easing restrictions on building height and density in established suburbs with existing infrastructure, the government and private developers could potentially:

• Increase Housing Supply: Unlock privately-owned land for medium-density housing, supplementing the government's large-scale projects.
• Curb Urban Sprawl: Promote efficient land use and reduce the pressure to expand into agricultural or environmentally sensitive areas.
• Improve Affordability: A significant increase in the housing stock would, in theory, exert downward pressure on both purchase prices and rental costs.
• Enhance Economic Activity: A sustained increase in construction would create jobs and stimulate related industries.

Potential Hurdles and the Path Forward

However, implementing such a policy in Kenya would not be without significant challenges. A primary concern is the capacity of existing infrastructure—such as water, sewerage, and road networks—to support increased population density. Any up-zoning policy would need to be carefully synchronized with substantial public investment in infrastructure upgrades to avoid overburdening already strained systems. Furthermore, public participation would be crucial to manage community concerns about neighborhood character, traffic, and access to public services. While the Australian model provides a powerful analytical framework, its direct application would require careful adaptation to Kenya's unique legal, economic, and social context. The debate it sparks, however, is essential for any nation serious about solving its urban housing crisis.