Rapid demand for AI datacentres in Australia could stoke inflation, experts warn – and crowd out land for housing

A datacentre in Melbourne. A NSW government inquiry has heard the rapid growth of the sector has raised concerns for the transport and logistics industries. Photograph: Ellen Smith/The Guardian View image in fullscreen A datacentre in Melbourne. A NSW government inquiry has heard the rapid growth of the sector has raised concerns for the transport and logistics industries. Photograph: Ellen Smith/The Guardian Rapid demand for AI datacentres in Australia could stoke inflation, experts warn – and crowd out land for housing Calls are growing for new datacentre approvals to be halted until stronger protections are considered Get our breaking news email , free app or daily news podcast T ransport 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 rapid growth of datacentres has raised concerns for the transport and logistics sector, with Transport for NSW telling the state parliament inquiry on datacentres there was already significant pressure on the availability of industrial land and infrastructure. The transport department agency said in a submission that freight and logistics companies depended on industrial land near markets and transport. Under a cloud: the growing resentment against the massive datacentres sprouting across Australian cities Read more “The shortage of land is causing major freight and logistics operators to leave Sydney . They are relocating their main centres to Brisbane or Melbourne where suitable land is available and less expensive,” it said. 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”. “The increasing demand on freight, from both increasing population and changing consumer patterns, will continue to drive the need for more industrial land for high volume logistics handling, and localised distribution centres across Sydney,” a spokesperson said. Transport for NSW warned that fragmentation of freight activities due to competing land uses could result in increased costs for business and higher prices for consumers, and said government needed coordinated policy to manage land use strategically. Sign up for the Breaking News Australia email The peak body for the datacentres sector, Data Centres Australia, said the vacancy rate was now close to 4%, citing CBRE research released on Tuesday . Its chief executive, Belinda Dennett, said supply was also responding, with “strong new development and continued logistics investment in western Sydney”. “The answer is to release and service more land and plan it well, putting the right uses on the right land, so freight keeps the transport-connected sites it depends on while datacentres deliver the investment, jobs and infrastructure they bring, and