State of the Land Report points to NSW housing affordability crisis continuing
The UDIA State of the Land 2022 report released today on UDIA National TV, shows increased demand for housing has exposed historically thin supply pipelines and together with the pandemic driven materials shortages, has resulted in a further deterioration of supply and affordability.
Greenfield market had a significant uplift in demand and sales were up 36% in Sydney to 9,200 lots, driving up prices up a further 14% in 2021 to nearly $550,000. However, supply constraints drove the inability to maintain lot supply at elevated levels, with the number of active greenfield subdivision projects falling to just 47 by the end of the year, the lowest number of trading estates recorded in Western Sydney for a decade.
Total new dwelling completions for greenfield release and multi-unit sectors fell 18% to 23,500 in 2021 and a huge 43% below peak supply achieved in 2018. The forecast is that supply will remain below the long run average for the next three years, highlighting the need for government to change its’ policy settings.
The large contraction in new housing supply, has been driven by the collapse in multi-unit completions, down by a third in 2021 and by half the 2018 peak.
“In a bright spot for apartments, units under construction are up 7% and hopefully this is the resurgence we need to see for apartment completions to recover over the next few years” said Steve Mann CEO of UDIA NSW.
“As we enter the last year until the NSW election in 2023, it is essential that all the major political parties sign up to providing a significant boost to housing supply if we are to make any significant headway on affordability,” added Mr. Mann.
With such a major under supply and international borders beginning to re-open, and with apartments typically needing a lead time of 2-3 years, we are likely to see significant upward pressure on apartment prices and rents until new supply reaches the market. It may be too late to avoid reduced supply leading to lower affordability, however by taking action now to bring new apartment supply to market the worst effects would be mitigated.
The issues facing the industry include an insufficient supply of development ready land, barriers to apartment finance, a lack of viable apartment precincts, and significant costs and red tape imposed by the NSW government on development, slowing housing supply and discouraging investment.
“Providing development ready land requires a marked uplift in the funding and timely provision of enabling infrastructure by both the NSW Government and Councils, fixing the biodiversity offsets market and a step-change in government co-ordination of land use and infrastructure,” said Steve Mann, CEO, UDIA NSW.
“The crisis in housing affordability can be resolved if we build a lot more homes for people. The NSW Government has recognised the problem. Now it needs to act,” Mr. Mann said.
The Sydney Data from the UDIA State of the Land 2022 report can be provided upon request.
For more information please contact Deanna Lane, Media & Communications Manager UDIA NSW
on 0416 295 898 or email@example.com