New research from The Reserve Bank of Australia shows that council zoning regulations restrict housing supply, and are therefore pushing property prices higher.

The report, 'The effect of zoning on housing prices', shows zoning regulations increase the average Sydney house price by $489,000.

Zoning restrictions increase house prices by $324,000 in Melbourne, $206,000 in Perth, and $159,000 in Brisbane, according to the report.

Apartment prices are also higher due to the impact of zoning restrictions, says the report.

“The myriad of planning restrictions, delays in gaining approval, taxes and charges are at the core of our affordability challenges which have resulted in decades of under-supply of new housing, particularly in metropolitan areas," said Tim Reardon, principal economist, HIA.

“Restrictions on the adequate release of land for new dwellings and on the type of dwellings that can be built are at the core of this undersupply of housing," he said.

“HIA has said for a long time now that the problem of housing affordability comes down to supply and demand - more land needs to be freed up, and the punitive taxes like stamp duty that come with buying a home need to be done away with.

“State governments should take on policies like fixing planning rules to allow more homes to be built in inner and middle-ring suburbs of our largest cities, and continue to support the supply of new land around our cities to achieve the right balance of housing supply," said Reardon.

HIA analysis shows that taxes on new housing comprise an estimated 44 per cent of the purchase price of a new house in Sydney, said Reardon.

“Planning restrictions have not kept pace with the ongoing high demand for housing,” Reardon concluded.

Click here to read the RBA report 'The effect of zoning on housing prices'.

Read more about housing affordability research:

First-home buyer numbers are up but affordability worse: REIA / Adelaide Bank report

Government inactivity contributes to affordability problems say HIA and Grattan

Transform state agency approval processes to lower new housing costs: Property Council