The international organisation representing the governments of the world's developed nations has slammed Australia's system of town planning laws, according to the Urban Taskforce.
The taskforce seized upon the OECD (Organisation for Economic Co-operation and Development) Economic Surveys: Australia, Volume 2010/21 - November 2010, Supplement 3, which was made publicly available this week.
The taskforce's chief executive, Aaron Gadiel, says the report highlights the serious medium term risk our economy faced as a result of restrictive planning laws and inefficient infrastructure charges on new homes.
"This credible international organisation is giving us an early warning that Australia's inadequate housing supply needs to be fixed," he says.
The OECD report says: "a rising share of the population is being priced out of the [housing] market."
"Measures should be adopted to stimulate supply and more efficient use of the existing housing stock," the OECD says.
"The supply constraints need to be lifted by streamlining the planning and zoning regulations," the report says.
"More transparent, harmonized and less restrictive zoning and planning regulations across jurisdictions are needed.
"Rationalizing infrastructure charges with nationally consistent principles would encourage more efficient land use and reduce delays and cost of negotiation between developers and local governments.
"Lower conveyance duties would reduce transaction costs and improve the use of the existing housing stock.
"Subsidies to demand benefiting first-home buyers should be phased out, and redirected to raising supply."
Mr Gadiel says the report makes it clear that there is a need to pursue structural reforms to enhance the functioning of the housing market.
"This report is a real wake-up call to complacent state and local governments," Gadiel says.
