Tuesday 22 June 2021 (Sydney, Australia)

UDIA welcomes NSW Government infrastructure initiatives but complacency over Housing Supply is worrying

The UDIA supports several infrastructure measures in today’s NSW budget, in particular:

• $139.3m for the Accelerated Infrastructure Fund (AIF2) to provide funding to councils in high growth areas to support construction activity and the release of new homes and employment areas in key greenfield sites.
• The legislation to enable Infrastructure Contributions Reform

However, we are extremely concerned with the government’s analysis that housing supply is nothing to worry about, particularly that “building approvals are now running well ahead of the change in population due to the lack of inward migration.” The government believes this suggests a potential over supply in the near term, relative to underlying demand for housing. This completely ignores the fact that Sydney is one of the most expensive cities in the world for housing and the housing supply crisis has now spread to Regional NSW. The budget does not include funding for growth in enabling infrastructure in these areas.

The NSW Productivity Commissioner’s recent white paper reveals there is still unmet demand for 48,000 homes including demand from returning expats, people wanting permanent residency who have been renting in Australia and buyers who wish to purchase housing to better meet their needs. If housing supply is not substantially boosted to meet demand, UDIA believes there will be a shortfall of 75,000 new homes by 2024.

As highlighted in the NSW Intergenerational report, the number one reason for the lack of housing affordability in NSW is the lack of housing supply. As the UDIA Greenfield Land Supply Pipeline Report from last week clearly shows, we are not on track to delivering the homes that are needed. By downplaying the importance of supply, the people of NSW will be condemned to having some of the worst housing affordability in the world and it will get worse.

Whilst AIF2 funding is welcomed, the NSW Government needs to commit to this level of funding for enabling infrastructure year in – year out to secure greenfield housing supply and provide certainty for investment. UDIA’s Building Blocks report identifies $1.4b of critical enabling infrastructure needing to be delivered over the next 10 years to secure the greenfield housing pipeline.

Historically, two-thirds of housing supply in NSW needs to be in apartments. The apartments markets in NSW is in deep decline with approvals down 64% from the peak in 2016 and commencements down 47% this will impact jobs and the economy. It is disappointing to see the Government do next to nothing to support this critical part of the housing supply pipeline. Once the borders re-open as planned for next year, the demand for apartments will soar. It will take 2-3 years for the apartment sector to respond to this demand surge, meaning that housing affordability will continue to deteriorate significantly.

“UDIA NSW will continue to make the strong case for the Government to make housing supply a key priority to deliver the homes that the people of NSW need and improve housing affordability for the future,” Mr Mann added.

ENDS

Media Enquiries:
Deanna Lane 0416 295 898 or media@udiansw.com.au.
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