Housing supply

Default masking shortfall in Sydney housing supply

Sydney faces a chronic housing shortage, due in part to the way housing targets are set, the Property Council of Australia has warned.

The analysis showed that several districts in Greater Sydney were struggling to provide enough housing and were not meeting targets, said PCA NSW executive director Luke Achterstraat.

“Every year that the house targets are not met, it exacerbates this deficit and worsens the affordability crisis,” said Achterstraat.

The housing targets for each district do not take into account the shortfall from the previous year.

“Essentially, the current targets do not build the deficit into demand, which means there is an underlying deficit that may persist, even when the targets are met, Achterstraat said.

PCA calls for housing delivery above target demand to account for the shortfall.

“At a minimum, housing targets must be met to prevent the deficit from increasing,” Achterstraat said.

Development could even be curtailed in these areas if there was a review of flood zoning and the operational status of new sites, Achterstraat said.

The NSW Government has expanded the Fast Track Infrastructure Fund to help councils cover the costs of core infrastructure for potential residential sites and has also invested $500m in initiatives to speed up approvals , land assessments and rezoning.

“In order to keep pace with future demand, Western Sydney requires the delivery of 25,530 homes per year – and we are currently 6,000 homes short of that number,” said Achterstraat.

▲ The $450 million precinct of St Hilliers and First Point Property in Thornton, north of Penrith, is in one of the areas in western Sydney that is overshooting its targets.

The APC report also said that an increase in the use of virgin land would put constraints on housing supply, as less land would be available for development.

In the five years to 2022, there have only been two years in which Greater Sydney has exceeded its housing targets, delivering over 42,000 homes in fiscal years 2017-18 and 2018-19.

The target for each year was 36,250 homes.

Multi-unit dwellings accounted for over 70% of the units delivered in both years with 30,150 units in 2017-2018 and 29,815 units in 2018-2019.

Almost 80% of LGAs in Greater Sydney have also successfully met their targets during these years.

While greenfield opportunities in Sydney’s west are popular, the report also says focusing on districts outside Sydney’s west to provide housing would help alleviate the undersupply problem.

Achterstraat said developing new sites was not the only answer.

“As opportunities for green housing dwindle, we will need stronger partnerships between state and local government to promote careful planning and renewal of town centers across the region,” Achterstraat said.

“New housing in existing communities supported by new infrastructure and additional services has the potential to improve everyone’s quality of life.