Submissions / UDIA NSW Pre Budget Submission

UDIA NSW Pre Budget Submission

NSW is facing a deep housing supply and affordability crisis. It has the most expensive housing in Australia and some of the most expensive in the world. NSW is more expensive than other states because of the lack of supply of new homes. Over a long period, NSW has failed to build enough homes for the growing population, resulting in higher prices.

The 2021-22 NSW Intergenerational Report recognised the problem and estimated that we need 42,000 homes per year out to 2060. This is a significant ask, given that we have not sustainably reached this level of construction in over twenty years. However, we are encouraged by the recognition of the issue by the new NSW Premier, reflected in his appointment of a Minister for Homes.

As the leading advocate for residential development in NSW, UDIA has been working with our members to look at what is required to deliver the 42,000 per annum. For the NSW budget, we have identified three areas of focus:

i. Provide a sustainable level of development ready land to support greenfield housing supply.
ii. Remove the barriers to the supply of apartments.
iii. Reduce the costs and red tape that the NSW Government imposes on development that is slowing housing supply and discouraging investment.

In addition, we need to consider the environmental impact of development. The construction, operation and maintenance of buildings accounts for almost a quarter of greenhouse gas emissions in Australia. UDIA and our members are working on how we can reach Net Zero by 2050. However, this needs to be achieved without decreasing supply or worsening affordability, a significant challenge.

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.

Meanwhile, the apartment market is hampered by a lack of consumer confidence and government taxes (foreign investor charges) that are preventing the financing of projects. In the short term, the NSW Government needs to focus on restoring consumer confidence and supporting the financing of projects.

NSW has the most expensive charges for the development of greenfield housing and the slowest planning system anywhere in Australia. Many of these issues go beyond the scope of a budget. However, there are a couple of areas where the Treasurer can make a difference. The proposed infrastructure contributions levels are too high and would put a significant constraint on supply in NSW in the years ahead. Additionally, several NSW Government departments are ignoring Infrastructure NSW (iNSW) guidance on infrastructure assurance of low risk, low-cost projects and unnecessarily tying projects up in red tape. This is increasing costs to Councils and the NSW Government and delaying the delivery of key enabling infrastructure, holding back the supply of new homes.

To reach Net Zero without reducing supply or housing affordability, the building industry and the NSW Government need to work together to develop an achievable roadmap.

The crisis in housing affordability can be resolved. The following recommendations in this submission will make a significant contribution to helping the housing industry deliver the 42,000 homes a year we need. The NSW Government has recognised the problem. Now it needs to act.

UDIA NSW Pre Budget Submission