Rapid demand for AI datacentres in Australia could stoke inflation and crowd out land for housing, experts warn. This was reported by Qazaqyia.kz citing The Guardian.
Transport for NSW and the Reserve Bank have warned datacentres could take scarce land from logistics firms and housing developments, pushing up prices and overheating the economy, as calls grow for a national pause on the booming sector.
The transport department agency said in a submission that freight and logistics companies depended on industrial land near markets and transport. The shortage of land is causing major freight and logistics operators to leave Sydney, relocating to Brisbane or Melbourne.
Transport for NSW acknowledged the industrial land vacancy rate had improved nationally and in Sydney in the past few years, but it was still well behind international rates and below the ideal market level. Increasing demand on freight will continue to drive the need for more industrial land.
Data Centres Australia chief executive Belinda Dennett said the vacancy rate was now close to 4%, citing CBRE research. She said supply was also responding with strong new development and continued logistics investment in western Sydney.
The Australasian Supply Chain and Logistics Association (ASCLA) supported Transport for NSW's position. Chief executive Steven Ballerini said datacentres are now competing directly with freight and logistics for the same well-located industrial land, with real consequences.
The Reserve Bank board has also warned rising investment in datacentres could add to inflation and has already put upward pressure on interest rates worldwide. Datacentre spending makes up a growing share of Australia's investment in machinery and equipment, which was the single largest contributor to economic growth in early 2026. Commercial and industrial building approval values hit a record high in May.
Pat Bustamante, a senior economist at Westpac, said the RBA would raise rates to cut spending elsewhere if datacentre spending competed for land and resources and pushed up prices. Home building would come under the most pressure.
Community groups are also increasingly challenging the growth of datacentres. Three communities in NSW, Victoria and Western Australia have allied to call on state and federal governments to halt approval of new datacentre developments until stronger protections for communities, cultural heritage and the environment are considered. The Lane Cove Responsible Planning Group highlighted that five datacentres are planned for the northern Sydney suburb, and would take up 40% of its industrial land.