Urban Taskforce welcomes the publication last night by NSW DPIE of housing approvals and housing supply data which shows in 2020/21 (ending June 30, 2021), 29,785 new homes were completed in greater Sydney. This represents a reduction from 2019/20 financial year new home completions of 8%.
The following table is sourced from the DPIE web site:
This data shows that even if every approval was acted on (which never happens), housing supply would not meet the long-term demand. In fact, DPIE’s data shows that the NSW planning system’s performance (as a whole) is significantly below the number required to put downward pressure on housing prices. The NSW Government’s Housing Strategy, Housing 2041, details the requirement for an average of 40,000 per year. Completions this last financial year were only 29,785 and the year before (which was largely not impacted by COVID) was only 32,464.
Approvals numbers did improve in the 6 months leading up to the end of June 2021. However, ABS data shows that with the closedown of Sydney, approvals also dropped off again.
So despite HomeBuilder; despite the various fast track programs applied by the NSW Government; despite the success of keeping the construction sector open throughout 2020 prior to its sudden closure in July 2021; the delivery of new homes was well down on where it needs to be.
That means the mortgage stress that Digital Finance Analytics have reported in their latest research work is likely to get worse, particularly in NSW, and more particularly in Western and South Western Sydney.
The only way to resolve this housing supply and housing affordability crisis is for Governments at all levels to work together to deliver significantly increased supply.
The data compiled and released by DPIE shows that it is the performance of the planning system that has slowed us down. With only 39,865 approvals, there is zero chance of achieving 40,000 new homes per year. Many “approvals” do not deliver a financially feasible delivery opportunity. Others are delayed as the market for the approved product evolves. Sydney needs increased housing supply in all areas and particularly where there is high demand. That starts with more approvals.
Growth in Greenfield housing supply on the fringes of Sydney has been strong. But apartment approvals have dropped right off. Without focussed attention on high rise and medium density approvals, housing affordability will drift further and further beyond young Australians wanting to live in Greater Sydney.