Sydney housing supply falls further behind: 8,800 home shortfall likely this year

19 April 2011

Todays figures from the Australian Bureau of Statics confirm Sydneys new housing supply is running well short of government projections, according to the Urban Taskforce.


The Taskforces chief executive, Aaron Gadiel, said todays ABS data reveals that in the last six months of 2010 just 13,200 new homes were completed by the private sector in NSW, the second worst result for that half since 1987.


15,600 homes were completed in NSW in the second half of last year, but a massive 14.9 per cent of these homes were public housing, up from less than two per cent in earlier years.


Mr Gadiel said the figures showed that Sydneys new home construction was entirely out-of-kilter with the upbeat projections issued by the NSW Department of Planning just 12 months ago.


The Keneally Government had claimed that Sydneys weak supply of housing had ˜turned the corner, Mr Gadiel said.


This was based on their projection that Sydneys supply of new housing would reach 24,900 homes in 2010/2011, and soar to 27,000 homes soon after.


Yet, todays figures tell us that – even with a massive one-off 14.9 per cent public housing boost – just 16,100 new homes are likely to be completed.


This is 8,800 less homes than projected by the former government.


Mr Gadiel said the gap between the previous governments unjustified optimism and the stark reality of urban development in Sydney is becoming more obvious as time goes on.


In the 2008/09 financial year the shortfall was 4,200 homes, in the following year it was 7,600 homes and its likely to be 8,800 homes this financial year, he said.


Mr Gadiel said the former governments targets were already woefully low.


Late last year a government report confirmed that the demand for extra housing in Sydney is likely to be between 25,000 and 50,000 dwellings per year, he said.


Not only were the former governments targets too modest actual housing supply is running at only two-thirds of their expectations.


The new Minister for Planning and Infrastructure, Brad Hazzard, has previously observed that the former governments goal of 27,000 extra homes a year for Sydney was nothing to brag about.


Independent economic experts and government 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 is being 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 apartment construction from getting off the ground, Mr Gadiel said.


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.


Mr Gadiel said that the housing undersupply had hit renters hardest


. In the last four years – median rents for three bedroom houses in outer suburban Sydney have soared by 44 per cent thats an average annual increase of 9.5 per cent, he said.


In the last four years, rents for two bedroom apartments in the inner suburbs have swollen by 41 per cent an average of 9 per cent a year.


Mr Gadiel said that urgent action is required. That means reform of the planning approvals system, new fairer rezoning rules and reduced development levies, he said.


Mr Gadiel said the last 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 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 included in the PDF available below.


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