‘Doing the heavy lifting’: The councils projected to fall short of new housing targets

Two-thirds of Sydney’s councils are projected to miss their target for the construction of new homes over the next five years, which is expected to put further pressure on the affordability crisis.

Data from the NSW Planning Department shows 23 out of 33 Sydney councils will not meet 2021-26 housing targets - leading to a shortfall of more than 48,000 homes.

Randwick is one of a number of Sydney councils that is expected to miss its 2021-26 housing target.Credit: Janie Barrett

Parramatta City Council is forecast to add 11,495 homes over the next five years - more than 12,000 dwellings short of the 23,660 new homes it promised to deliver by 2026.

The City of Sydney is expected to miss its five-year target by about 8400 homes, while City of Canterbury Bankstown, Randwick and City of Ryde will also deliver fewer homes than promised.

In contrast, The Hills Shire is predicted to deliver 5375 homes over its minimum target, as will Sutherland Shire (1325) and Burwood (870).

More than half of Sydney councils missed housing targets for 2016-21, amid growing community anger about overdevelopment and a lack of infrastructure even in wealthy areas such as Sydney’s eastern suburbs.

Parramatta Labor mayor Donna Davis said western Sydney was “doing the heavy lifting” when it comes to accommodating Sydney’s growing population.Credit: Rhett Wyman

Grattan Institute economic policy program director Brendan Coates said Australia would become a less equal society if it does not build enough homes.

“Either people accept greater density in their suburb, or their children will not be able to buy a home, and seniors will not be able to downsize in the suburb where they live,” he said. “Economic growth will be constrained. And Australia will become a less equal society – both economically and socially.”

Peter Tulip, chief economist at the Centre for Independent Studies, said repeatedly falling short of targets to deliver new homes was adding to the housing affordability crisis.

“As a rough rule of thumb, every 1 per cent increase in the housing stock, holding other things unchanged, is estimated to reduce the cost of housing (both rents and prices) by about 2.5 per cent,” he said.

The NSW Productivity Commission last year estimated a shortfall of 170,000 dwellings - about 5 per cent of the NSW housing stock - by 2038, which Tulip said would add 12.5 per cent to the cost of housing.

Even though they are projected to fall short, many councils such as Parramatta and Ryde surpassed earlier housing targets. Parramatta Labor mayor Donna Davis said the council was on track to deliver 87,900 dwellings by 2036.

“Western Sydney is doing the heavy lifting when it comes to accommodating Sydney’s growing population – including the City of Parramatta – but the load needs to be shared across all local government areas,” she said.

Ryde Liberal mayor Jordan Lane said he did not want the council “subsidising the responsibilities” of other councils in Sydney.

“Ryde has done more than its fair share of the heavy lifting when it comes to housing supply,” he said. “It’s about time we grow a backbone and stopped giving in to the big developers.”

Randwick councillors voted last week to highlight their opposition to the overall housing targets set by the state government, even though Randwick Labor mayor Dylan Parker said, “our community is well on the way to meeting its targets already”.

Parker accused developers of “bashing on councils” and said demands for the removal of planning powers were “nothing less than a shameless power grab by a vested interest group”.

“Bypassing communities and ramming development through in the name of affordability seems to me like a recipe for disaster,” he said.

A City of Sydney spokeswoman said the council’s own data showed it was on track to meet long and near-term housing targets.

Urban Taskforce chief executive Tom Forrest said the ongoing shortfall in housing supply was primarily a result of poor planning.

“It starts with timely rezoning of land and releasing additional residential areas at the right locations – areas where people actually want to live,” he said.

Forrest said housing affordability will worsen once migration picks up: “Without increased supply, this could undermine the Reserve Bank’s strategy to ease home prices rises with interest rate rises.”

Gabriel Metcalf, chief executive of the Committee for Sydney, said the failure to hit housing targets was the “smoking gun” that showed the planning system needed reform.

“In terms of housing targets, there doesn’t need to be a lot of drama about it,” he said. “Either local governments hit their targets or the state steps in.”

Research by the Committee for Sydney suggested the city could fit up to half its population growth within walking distance of heavy rail and Metro stations.

“We all know Sydney is too expensive,” Metcalf said. “It’s driving a wedge between the generations and locking young people out of homeownership if they are not lucky enough to inherit wealth.”

A Planning Department spokesman said it was important to increase housing supply and affordability, but “it is far too early to be calling out councils for not meeting their new housing targets”.

“Each council’s current zoned housing capacity is being evaluated, along with the expected housing pipeline over the next six to ten years, and monitoring for year one has only just begun,” he said.

The NSW government was also spending $3 billion on 378 infrastructure projects that “will mean more homes can be built”, he said.

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