NSW Housing Targets in Jeopardy as Approvals Plunge

Housing affordability is under pressure with low building approval rates affecting the delivery of housing targets in New South Wales.

NSW Property Council executive director Luke Achterstraat said the Australian Bureau of Statistics data showed an almost 10 per cent downturn in building approvals across the state.

“Since the unwinding of stimulus measures and the return of lockdowns across parts of NSW and Victoria, approvals for private houses have fallen 24.4 per cent from the record high in April,” Achterstraat said.

“In the year to March 2021, NSW delivered 29,500 new homes, well short of the 42,000 outlined by the Greater Sydney Commission [to meet population demand].

“A reduction of nearly 10 per cent in dwelling approvals in NSW is a concern when we are already not meeting housing targets across the state, and have a 50,000 dwelling shortfall to make up from previous years.”

Housing Industry Association economist Angela Lillicrap said the latest date indicated most HomeBuilder projects had been approved and would start construction in the coming months.

Sydney’s median house price is now more than $1.4 million, rising almost $1200 a day in the second quarter of 2021.

A typical Sydney house is now about $120,000 more expensive than it was at the end of February.

CBA Economics has forecast dwelling prices to rise by 20 per cent nationally over 2021, with Sydney expected to experience the biggest surge in values.

The NSW government has forecast a further 725,000 new homes will be needed by 2036 to meet demand based on current population projections.

Achterstraat said more needed to be done to streamline the “poor performing” planning approvals process.

“The delay in obtaining approvals is adding significantly to the cost of housing—holding costs for property are high and greatly increase risk and deter investment,” he said.

“NSW has the least performing planning system in the country and processes development applications are slower than the rest of the country.

“The failure to meet demand for new housing is driving up prices and the everyday Australians are suffering the consequences.

“Without addressing supply, we have a multi-generational issue that will price aspiring homeowners out of the market, and potentially lose talent to other states with more affordable housing markets.”

Residential property construction times have blown out to double across 2021.

A single-storey dwelling, which required six to eight months to build in 2019-2020, now takes between 12 to 16 months, while a double-storey home, which had previously taken 10 to 12 months, is now taking 14 to 20 months to complete.