Undersupply locking first home buyers out of Sydney property market
First homebuyers are paying the price of a runaway housing market that’s seen ten years of undersupply.
NSW
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First homebuyers locked out of Sydney’s runaway housing market are paying the price for a decade of “consistent undersupply” of new homes being built, with NSW building nearly 100 fewer homes per 1000 new residents than Queensland and Victoria over the past decade.
And while Planning Minister Rob Stokes this month pledged to fast track rezoning and accelerate home-building in the regions, that’s “just a start” for what needs to be done to rectify ten years of home-building shortfall, Urban Taskforce CEO Tom Forrest said.
“There’s been 10 years of undersupply, recognised by the NSW Government’s own Productivity Commission,” Mr Forrest told The Daily Telegraph, adding “supply is the primary driver of housing unaffordability”.
Since a peak of 55,995 in Greater Sydney in 2016, dwelling approvals in the state have also fallen year on year, with just 39,645 dwellings greenlit in 2019, dipping to 32,444 in the Covid-impacted 2019-2020 financial year.
Figures in the Productivity Commission’s green paper, released late last year, criticise a “relatively unresponsive planning system” in NSW which meant just 212 dwellings were built for every 1000 extra people in the state over the 10 years to 2018.
Victoria and Queensland each completed around 295 dwellings for every 1000 extra people over the same period.
Experts in the field have identified a lack of housing supply as the key issue in driving up costs, including former Reserve Bank of Australia Governor Glenn Stevens, who pinpointed that housing supply needs to be “able to respond to demand in a more elastic way” if the goal was housing affordability.
“Certainly, if our objective is housing being ‘affordable’ … This means we need to have the supply side able to respond to demand in a more elastic way,” he said in a 2017 report.
It comes four years after Gladys Berejiklian announced at her first press conference as Premier called housing affordability “the biggest issue people have across the state”, pledging “that every average, hardworking person in this state can aspire to own their own home”.
While housing affordability was named among the Premier’s Priorities in 2017, it now doesn’t even make the list.
The Premier a goal of 61,000 dwelling completions statewide on average per financial year to 2020-21, and while NSW building rates have squeaked above that, ballooning house prices show the supply has failed to keep up with demand, Mr Forrest said.
Adding extra pressure was the mishmash of property under different ownership “holding back” development on rezoned land in western Sydney – with a lack of a co-ordinated approach slowing down the building of thousands of new homes.
“The government has rezoned entire areas, but the problem is it’s owned by 5000 different people in one acre lots. If you can’t consolidate it, you’re never going to have housing outcome,” he said.
Few projects have highlighted the dizzying labyrinth of NSW’s planning system than Tidapa – a proposal to turn a 147-hectare western Sydney farm into 800 new homes, which has been mooted for 15 years.
Edward O’Grady – whose parents Phil and Judy first purchased the Cobbitty property in 1972 to run prized cattle – said ideas to develop the site have been in the works since Labor announced southwest Sydney as a growth area in 2005.
Since then, the proposal – which includes 800 new homes and a Sporting Centre of Excellence for southwest Sydney – has pinballed between government departments and state and council.
“We’ve spent 15 years responding to these various government processes,” Mr O’Grady said.
“It’s just gone on and on.”
A spokesman for DPIE said there was no application for project’s rezoning lodged with the department, with a decision instead to be made by Camden Council.
Mr O’Grady said the development was a “model” for the future development of land around the Aerotropolis, with larger blocks, green space, and ridge lines to protect the “semirural” feel of the site.
The proposal to rezone the land from rural to urban will finally go to Camden Council in July.
“We’ve worked on this for so long and we just want it to be defined by a strong sense of local identity,” Mr O‘Grady said.
“It’s what the community is asking for. What’s more useful – land for 40 cattle or up to 800 homes for 2,400 people?”
The concerns over housing supply comes as Planning Minister Rob Stokes announced a raft of changes in the state budget earlier this month in a bid to boost housing supply, including hiking up infrastructure contributions in a move the government says will lead to an additional $12 billion being made available for future roads and transport.
He also announced $20 million over four years to go towards major rezoning projects, coming after he fast-tracked plans to rezone land for 18,000 new homes across southwest Sydney.
“It’s plain economics. We need supply, particularly in the southwest,” Mr Stokes told The Telegraph.
While the developments were welcomed by Mr Forrest, he said the government had to act fast to streamline the planning process and bring forward the development of more homes.
“It’s a good start, but now we really need more of it,” he said.
Mr Stokes told the Telegraph that housing approvals in NSW for new dwellings rose to 54,799 in the year to April 2021 and said it pointed towards a recovery, despite the figures lagging behind 2016’s peak of 73,489.
“While we’re not yet at the record high approval rates of 2016, despite the pandemic, there is a clear trend indicating that approvals are in recovery from their recent trough, with a sustained increase in detached housing approvals over the last year,” he said.
“We’re reforming the planning and contributions system to speed up assessments and housing supply, while providing guidance, funding and flexibility to councils to accelerate planning in their areas.”
SPLASH THE CASH TO HELP WEST GROW
The Mayor of one of Sydney’s western suburbs set to boom with new homes in the coming decades says swelling schools, overloaded hospitals and packed public transport presented one of the biggest
Cumberland City Council has endorsed a plan for 28,000 new homes in the area by 2036.
However Mayor Steve Christou says “even though we’ve approved them, the main advocacy we need now is from the state government”.
“The state government is pressuring councils to build these new homes, but where is their support for infrastructure? We need upgrades to public transport out here, our schools are nearly at capacity. They need to step up and help us with that.”
He said the Auburn and Westmead Hospitals were already “working at capacity”.
“When it comes to education and hospitals, when you want to put in 28,000 dwellings into a particular location, you need to absolutely provide these upgrades,” he said.
Planning Minister Rob Stokes announced in the state budget this month changes to infrastructure contributions, which the government states will net an additional $12 billion for future roads, transport and parks.
Cumberland Council is currently in the process of reviewing their affordable housing policy.
Their most recent study undertaken by the council stated 19,000 households in Cumberland were struggling to pay the rent or mortgage.
Rental stress – defined as when more than 30 per cent of a household’s income goes towards paying the rent – impacted 13,500 households in the area, while another 5500 battled with purchase stress.
Originally published as Undersupply locking first home buyers out of Sydney property market
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