Media Archive / UDIA Report shows Apartments at the heart of the housing shortage in NSW

UDIA Report shows Apartments at the heart of the housing shortage in NSW

In a comprehensive research study, Urban Development Institute of Australia NSW (UDIA) 2022 Apartment Supply Pipeline Report reveals that NSW is facing a significant backlog of 48,000 apartments heading into FY23.

“Without action to remove the obstacles holding back supply, we expect this to rise to nearly 60,000 over the next two years due to continued declining supply, which means NSW would need to produce 13 consecutive years of record high completions, just to reverse this backlog,” said Steve Mann, CEO, UDIA NSW.

When analysing historical new housing supply in NSW, it is clear that the apartment market has been at the centre of the recent decline.

The chart below shows it has been a very bumpy ride.

Analysis of Housing Supply in NSW

Source UDIA NSW and ABS

Over September and October, apartment developers provided UDIA with data on 125 projects, covering over 58,000 units in the future pipeline, sharing the constraints that are directly impacting the delivery of their high-rise projects and preventing a healthy pipeline of apartment supply across NSW.

  • 92% of Surveyed Apartment Projects are facing at least one constraint preventing it from reaching completion.
  • 88% of units in the pipeline of large projects are currently facing constraints impacting their potential for delivery, an increase from 72% last year.

More specifically, the top issues that developers revealed were holding back apartment supply are:

  1. Barriers relating to development finance including restrictions from the banks, presales and feasibility concerns.
  2. The NSW Planning System and VPA negotiations for contributions and community works.
  3. Engaging with infrastructure providers such as Transport for NSW (TfNSW).

The following graph demonstrates the proportion of responses identifying the specific issues facing apartment developments across the UDIA survey.

What is holding back apartment supply in NSW?


In the later years of the last decade apartments rivaled the supply of greenfield housing, reaching up to 43% of supply. Now they represent just a quarter of new dwelling supply in NSW. With rents skyrocketing across the entire Sydney megaregion, leading to chronic affordability and housing shortages, it is critical that the constraints identified in our report are removed as a matter of urgency to get supply back to where it needs to be.

UDIA also revealed a major increase (67%) in apartments that are under assessment, or awaiting their approval. However, the increase in apartments under construction has grown by less than half of that (30%). This is an unsustainable trend, and the character of NSW’ urban development landscape cannot grow under these conditions, where the pipeline for available supply is constantly being pushed out.

In the report UDIA presents some tangible policy recommendations that can radically reform the speed and efficiency that apartment supply comes to market, especially during times of economic hardship. The urgency with which action must be taken, is increasing daily.

“Apartments will be a key for the successful future of our state and we must turn the current situation around to avoid rents from escalating and address the demand backlog, so that we can build up diverse housing choices for the people of NSW,” said Mr Mann.

“With the cost of living being the number one issue for the electorate and the cost of housing being the single most significant cost for families, any government serious about making life better for the people of NSW needs to take action to tackle the apartment shortage and make homes more affordable,” added Steve Mann.

The full report can be found here UDIA Apartment Supply Pipeline Report 2022


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