14 October 2010
New figures released by the Australian Bureau of Statistics (ABS) have confirmed that state government projections for Sydneys housing supply will not be achieved, according to the Urban Taskforce. The Taskforces chief executive, Aaron Gadiel, said government claims that Sydneys weak supply of housing had turned the corner have turned out to be wrong.
In April the government assured the community that Sydneys housing supply was back on track, but the latest figures from the ABS have blown the governments projections out of the water, Mr Gadiel said.
The NSW Government had forecast Sydneys supply of extra houses would exceed 27,000 new homes a year within three years, with an extra 18,600 homes being added to Sydneys housing supply in 2008/09 and 21,000 homes added in 2009/10.
By analysing ABS figures released yesterday, we now see that Sydney only secured around 14,400 extra homes in 2008/09 and just 13,400 homes in 2009/10.
Thats a shortfall of 7,600 homes in the last year alone.
The governments targets were already woefully low – last month a government report was released confirming that the demand for extra housing in Sydney is likely to be between 25,000 and 50,000 dwellings per year.
Not only are government targets too modest actual housing supply is running at only two-thirds of their targets.
Independent economic experts and the governments own advisors have said that Sydney needs to more than double its housing supply – if Sydney is to be liveable and home prices and rents are to be kept under control.
Mr Gadiel said the supply of new homes by the private sector was strangled by rules that prevent enough new homes being built across Sydney.
In inner suburban areas where transport infrastructure is good, planning rules have been used to prevent new pedestrian-friendly urban developments from getting off the ground.
In Western Sydney, a mixture of poor land release policies and a lack of government infrastructure investment have prevented enough new suburbs being built.
Across Sydney, the nations highest development levies have also crippled efforts to build housing at a price ordinary home buyers can afford.
Thats why rent increases are running at more than nine times the rate of inflation, in key parts of Sydney.
Last month the NSW Government itself released a report prepared by Access Economics, that said there was a need to reinvigorate microeconomic reform agendas and highlighted the particular need to ensure that planning policies and regulations are able to ameliorate pressures associated with expected population growth.
The report said there must be responsive adjustments of regulation and the planning framework especially with regards to both the release of land and re-development of brownfield sites.
A separate study commissioned for the NSW Treasury also damned the NSW planning system and called for reform.
The governments own experts have found that targets for an extra 25,000 homes or more will not be achieved without major policy changes by government, Mr Gadiel said.
Its time the government listened to this advice and took firm action.
This means reform of the planning approvals system, new fairer rezoning rules and reduced development levies.
Mr Gadiel said the government had attempted to overcome problems in the planning system, by embarking on a massive program of public housing construction and exempting itself from its own planning rules and development levies.
Even with this one-off public housing boom, we can still expect extra housing supply in 2010/11 to fall well short of government targets.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
NOTE: A graph illustrating the basis of the figures is in the attached PDF.