ABS data released today confirms the worsening state of the NSW housing market and further entrenches the challenges that people in NSW face when trying to get into the housing market.
The combination of rising interest rates on top of already high construction costs has begun to rear its head, meaning the backlog of unmet housing demand will not be resolved without immediate Government intervention.
New dwelling commencements in NSW for the 12 months to December 2022 have recorded their lowest figure since June 2014, dipping to below 49,000. The graph below shows that this has been explicitly led by the apartment market, with annual commencements collapsing to below 10,000 for the first time in over a decade.
Source: ABS Building Activity; UDIA NSW
The 54% annual decline in apartment commencements is also the steepest annual decline that any housing typology has experienced in NSW over the last 10 years.
UDIA expects this to have a negative impact on affordability and be acutely felt throughout NSW, as migration balloons in the heart of Sydney metropolitan over the coming 24 months. In addition, NHFIC’s recent ‘State of the Nation’s Housing 2022-23’ report revealed that a higher proportion of NSW renters are paying greater than 30% of their income on rent than in any other Australian state.
The new completions data also released today, points to equally worrying figures with total completions for the year now sitting below 50,000 for the sixth consecutive quarter. Apartments are leading the decline, dropping to a 9-year low of 10,200.
The new completions data also released today, points to equally worrying figures with total completions for the year now sitting below 50,000 for the sixth consecutive quarter. Apartments are leading the decline, dropping to a 9-year low of 10,200.
Unfortunately, housing supply in NSW is worsening with nowhere near the supply levels needed coming online to meet demand and place downward pressure on prices. The existing pipeline of projects will continue to be pushed out under these current conditions.
While housing remains a monumental challenge in NSW it also presents an opportunity and provides the impetus for the new NSW Labor Government to take immediate action to facilitate the delivery of affordable and well located homes across NSW. With the apartment market in dire straits, we call on the Government to focus their actions here and implement measures to:
- Strengthen the apartment market by boosting presales. Apartment developers surveyed as part of UDIA’s Apartment Supply Pipeline Report in November 2022 identified that obtaining presales remains the biggest barrier to the delivery of large apartment projects. To help resolve this, UDIA recommends the removal of the foreign investor surcharge, and introducing a rebate on transfer duties, to help lift investment into apartments.
- Promote mixed-use precinct delivery by removing the GCC Retain and Manage Policy, which sterilises growth in employment lands. Allowing homes and jobs to be in proximity to each other increases productivity outcomes and the availability of homes and creates liveable and vibrant places.
- Expedite applications under the state assessed planning proposal pathway.
- Increase housing targets for strategic precincts which benefit from existing or proposed transport infrastructure.
- Prioritise housing and incentivise accessible locations, including affordable housing.
UDIA NSW will continue to work with the new Labor Government and advocate for meaningful improvements to address the housing shortage for the people of NSW.
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Media Enquiries:
Deanna Lane 0416 295 898 or dlane@udiansw.com.au