The Property Council said every year that Sydney dwelling targets are not met exacerbates the deficit and worsens the affordability crisis.
The Announcement:
A recent Sydney housing analysis from the Property Council of Australia and Gyde Consulting has found several districts of Sydney are struggling to deliver enough housing, adding concern to Australia’s housing affordability crisis.
Property Council’s NSW Executive Director Luke Achterstraat said the results showed there was an underlying deficit of housing supply in Greater Sydney.
“Each year the dwelling targets are not met exacerbates this deficit and worsens the affordability crisis. Crucially, the current targets do not incorporate the deficit into dwelling demand, meaning that there is an underlying deficit that can persist, even when dwelling targets are achieved,” Mr Achterstraat said.
“Ongoing delivery of housing above the identified target demand is required to manage this deficit and ensure sufficient housing supply for Greater Sydney’s population.
“At a minimum, housing targets must be met to avoid the deficit increasing.”
Mr Achterstraat said there was more positive news surrounding Western Sydney.
“Councils in Western Sydney continue to lead the pack on the delivery of new housing supply with Blacktown, The Hills, Penrith, Liverpool and Wollondilly delivering beyond the five year targets set by the Greater Sydney Commission,” he said.
“It is important to note that these areas have a higher proportion of greenfield development than other parts of Sydney, and that while future projections may seem positive, the review of flood zoning and serviceability of new sites could lead to a curtailing of development in these communities.
“We support the government’s expansion of the Accelerated Infrastructure Fund to unlock more housing growth in this area and note that the coming flood review will make it all the more critical that government review the urban/rural boundary of Sydney in search of opportunities to build suitable sites.
“It was promising to see a strong housing supply focus in this year’s NSW Budget which included $500m in supply initiatives such as faster approvals, expert assessments and the rezoning of land for housing precincts.
“However, Mr Achterstraat said more work needed to be done.
“In order to keep pace with future demand, Western Sydney requires the delivery of 25,530 dwellings per year – and we are presently 6,000 homes short of this number,” he said.
“As greenfield housing opportunities decline, we will need stronger partnerships between state and local government to promote the careful planning and renewal of the region’s town centres.
“New housing in existing communities supported by fresh infrastructure and additional services has the opportunity to improve everyone’s quality of life.”
The Greater Sydney Housing Analysis Concluded:
The pandemic has changed the people engaging in the Australian housing market.
While immigration was low and migrants were unable to enter Australia, latent demand for housing amongst the domestic population fuelled high housing prices and increased demand for housing. With a decrease in spending on items such as holidays, more funds were available to domestic buyers to purchase a home.
This demonstrates that, while demand is influenced by levels of immigration, it is not the sole factor to be considered when assessing housing demand. The latent demand for housing evident in Greater Sydney will continue to increase while housing targets are not achieved.
As demonstrated in the peak years of housing delivery in 2017-18 and 2018-19, infill housing was the dominant housing type delivered. It is critical to maintain the historical proportional split between the two housing types, as infill housing typically provides a greater number of dwellings, with better access to existing infrastructure, services and transport options.
The increasing consumption of greenfield land demonstrated in the increasing proportion of housing coming from those areas will reduce the land available for such development and erode any supply which ensures sufficient future supply of housing.
This will generate supply and delivery constraints in the future, particularly if the proportion of greenfield housing delivery continues to increase.
Despite the two years of exceeding the target, there is an underlying deficit of housing supply (or ‘undersupply’) in Greater Sydney. Each year that the dwelling targets are not met exacerbates this deficit. Crucially, the current targets do not incorporate the deficit into dwelling demand, meaning that there is an underlying deficit that can persist, even when dwelling targets are achieved.
Ongoing delivery of housing above the identified target demand is required to manage this deficit and ensure sufficient housing supply for Greater Sydney’s population. At a minimum, housing targets must be met to avoid the deficit increasing.
During the 0-5 year period, Greater Sydney achieved its housing targets twice in the 2017-18 and 2018-19 financial years. Both of these ‘peak period’ years delivered just over 42,000 dwellings each. This exceeded the target of 36,250 dwellings per year. Understanding the factors that influenced the higher delivery in these years assists in knowing what conditions need to be considered when encouraging sufficient future supply of housing to meet demand.
In 2017-18 dwelling completions delivered 30,510 multi-unit dwellings and 11,670 detached houses. In 2018-19, 29,815 multi-unit dwellings and 12,600 detached houses were delivered. Multi-unit dwellings therefore contributed most in these years, making up over 70 per cent of delivery in both years.
During the 2017-18 and 2018-19 peak periods, there was a clear distribution of housing delivery across Greater Sydney. Nearly 80 per cent of LGAs met or exceeded their target during this period, meaning a range of housing types were supplied across a range of areas infill and greenfield, multi-unit dwellings and detached housing.
In recent years, there has been an increasing proportion of greenfield land in completions, which indicates a reliance on Western Sydney to deliver sufficient housing, as this is where the two, identified greenfield growth areas are located. It is clear that, in order to meet future targets, dwellings must be provided across the whole of Greater Sydney, rather than concentrated in one or two districts.
Source: Property Council
