Developers stuck in ‘limbo land’

The research by a group of academics found the national housing supply had kept pace with population growth but this was not evenly spread across the country. Ms Ong, one of the academics said supply is not leading to more affordability.
The research by a group of academics found the national housing supply had kept pace with population growth but this was not evenly spread across the country. Ms Ong, one of the academics said supply is not leading to more affordability.

Despite record levels of home building, Sydney’s housing supply continues to fall behind population growth and is failing to deliver improvements in affordability, a new report shows.

The harbour city is among the worst capital cities in the country in terms of building enough homes to cater to new residents, research from the Australian Housing and Urban Research Institute and the Bankwest Curtin Economics Centre found.

Experts are warning the planning situation in NSW is so difficult it’s leaving developers waiting for more than a year for approvals and dampening efforts to improve affordability with extra supply.

The research by a group of academics found the national housing supply had kept pace with population growth but this was not evenly spread across the country.

Adelaide, Canberra, Hobart and Melbourne had built enough to keep up with their growing populations from 2005-06 to 2013-14. 

“Increases in Perth and Sydney’s housing stock over the past ten years have been insufficient to match the increase in their growing populations,” One of the academics, Ms Ong said referring to her research.

In the past few years, Sydney reached record levels of home building, but still hasn’t kept up with the underlying demand.

And even the homes that have been built were not helping take the pressure off the less expensive segments in the market.

“Our research indicates an increase in housing supply is not leading to better housing affordability,” she said.

She said there was a need for targeted government intervention to improve incentives for developers to build at the lower end of the market, such as direct subsidies in areas where affordable housing was needed.

Compass Economics chief economist Hans Kunnen said building at the same rate as the growing population wouldn’t cause prices to fall dramatically.

“It would just help to hold back prices, and after a period of wages growth people would be able to afford to buy.”

He said the answer to tackling the issue of underperforming supply levels could be a combination of infill and a faster release of land, in smaller lots, on the outskirts. 

Chris Johnson, chief executive of developer lobby Urban Taskforce, agreed there was a government level issue.

“The blame is with the planning system, which is slow and convoluted.

“There’s tension between state government saying where new infrastructure and growth is going and local councils [disagreeing]. This is limbo-land for developers.” Mr Johnson said.