‘Chronic housing crisis’ costing Sydney’s economy $10bn a year
A damning report on Sydney’s ‘chronic housing crisis’ has revealed the staggering billion-dollar annual cost to the city’s economy as it jumps ahead of London in unaffordability.
Sydney now ranks as the world’s second least affordable major housing market after Hong Kong, having overtaken London, Amsterdam and Toronto in the past decade, with a damning new report claiming the “chronic housing crisis” is costing the city’s economy $10bn a year.
The report, produced by think tank Committee for Sydney, reveals median property prices are now more than 13 times median annual household income.
Unless the housing crisis is alleviated, $1.5bn would be lost annually in terms of talent, the committee estimated, with at least 10,000 extra people leaving Sydney’s talent pool each year for the next decade.
Almost $3bn annually would be lost across innovation, with 10 per cent fewer patents registered and 20 fewer well-funded start-ups over the next five years.
Across productivity, almost $7bn is lost annually as a result of labour and property-related costs, and “inefficient commutes” as workers relocated further out – or away from public transport – to find cheaper places to live.
“What we’re experiencing isn’t a short-term crisis, it’s chronic, and it’s costing Sydney’s talent, innovation and productivity $10bn each year,” Committee for Sydney chief executive Eamon Waterford said.
NSW Housing Minister Rose Jackson said tackling the crisis and building more homes was a “priority”.
“It is not just a housing issue, it is a cost of living issue – people are struggling to afford a place to rent, let alone buy,” the minister said,
“The only way we’re going to get people off the housing waitlist is by getting them into homes – delivering more social and affordable homes is vital to make this possible.”
The report, released on Thursday, recommends an ”inclusionary zoning target” to provide affordable housing in new developments – as only 4 per cent of Sydney housing is social and affordable – and more infrastructure around new builds.
Olivia Orchowski, founder of women’s health start-up Femtek, is one of the faces of the billion-dollar cost. Accepted onto a Sydney-based intensive course for start-ups, she flies in from Melbourne every week, where she is based, as it’s significantly cheaper than a short-term rental.
“It’s cheaper for me to drive to the airport, fly into Sydney and back the same day,” Ms Orchowski said. “We looked at short-term rentals but the prices were just obscene, there was nothing we could do.” Ms Orchowski explained how the cost of Sydney’s housing would weigh on the minds of new businesses.
“There are other considerations, but if it’s a choice of establishing a start-up here or Adelaide, why would you move to Sydney to be gouged out of your mind when most things now can be done online,” she said.
Ammar Mendo owns construction firm Hammer Homes, which operates in the Liverpool local government area – the council with the slowest development application wait times in Sydney – and said DA determinations could take upwards of a year.
“We lock in prices early with clients, but then the approval process takes too long and prices creep up,” Mr Mendo said.
“It has a long-term effect on growth – we can’t take on too many projects or hire more staff with the uncertainty.”
The state government expects 36,000 homes will be built a year across the next five, against demand for an additional 62,800.
Property Council NSW executive director Katie Stevenson said the figures showed “how alarmed we should be”.
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