Call for urgent reforms to fix NSW housing crisis

The NSW Property Council is urging the victor of the 2023 state election to implement a broad reform agenda to address a predicted 180,000 dwelling shortfall.

An artist’s impression of the Ivanhoe Estate housing development in Sydney’s northwest.

The NSW Property Council is urging the victor of the 2023 state election to implement a broad reform agenda to address a predicted 180,000 dwelling shortfall and ensure local councils are held to account if they miss housing construction targets.

As part of its March election platform, the Property Council outlined the growing housing crisis confronting NSW after years of inaction. With the state already facing a 100,000 dwelling shortfall, consistently missed targets have left it on track to be unable to meet housing demand by 2036.

A failure by local councils to hit targets will place greater pressure on an already overheated Sydney property market, pushing prices up even further.

In the last financial year, Greater Sydney completed only 29,000 of the 36,250 dwellings required to keep pace with demand.

“Sometimes there are legitimate reasons for under delivery on targets, but every year of anaemic housing growth works to compound a city’s housing affordability crisis,” the report said.

Data released by the NSW Planning Department in May revealed 23 out of 33 councils across Sydney were on track to fall short of their 2021-26 housing targets, contributing to a near 50,000 shortfall of homes.

The deficiency has contributed to a severe shortage of rentals across Sydney, with listings falling by more than 30 per cent over the past year, according to Core Logic data. Vacancy rates are languishing at 20-year lows.

The NSW Property Council outlined several policies for an incoming Coalition or Labor government. At the core of the proposed reform, a “carrot or stick” model would incentivise delivery of housing for laggard councils while instilling accountability into the planning system.

This includes implementing “minimum housing targets” in conjunction with a stronger commitment to delivering extra supply, through what the council coined a “red card model”, requiring the government to identify underperforming councils and precincts: “There is a need for clearer targets, reporting and accountability at the state and local level. If local councils are trusted to facilitate delivery, they should be better monitored and managed – the state can delegate responsibility but not accountability.”

State planning powers could be used to deal with councils seriously underperforming against their dwelling targets.

The Property Council’s preferred method, however, would be the NSW government establishing a “housing incentive fund” to encourage councils to hit targets.

The fund would provide incentive-style payments aligned with housing supply objectives.

The Property Council also called for housing supply and affordability to be included as priorities for the next premier, delegating responsibility for agency co-ordination to the Department of Premier and Cabinet, and ensuring accountability for targets reached the top level of ­decision-making.

“The current housing crisis is such that we should not be absolving the accountability of the cabinet decision-makers for the performance of the overall planning system,” the report said.

Building high density housing around transport hubs and landowning government agencies would assist local councils in meeting dwelling targets, the NSW Property Council said.