The Greater Sydney Megaregion faces a shortfall of available land on which to build housing for at least the next eight years, a new report has warned.

For its Greenfield Land Supply Pipeline report released last week, the Urban Development Institute of Australia (NSW) (UDIA NSW) undertook an in-depth survey of greenfield land developers in the Greater Sydney Megaregion (Greater Sydney, Illawarra, Shoalhaven, Central Coast, and the Hunter) to identify the anticipated schedule for future lot delivery and to quantify the constraints preventing lots from being delivered.

It found that:

• Between now and 2029, the region faces a shortfall in the number of new lots of vacant residential land which are expected to be delivered in every year.
• Much of the land which is slated for delivery remains subject to capacity constraints such as enabling infrastructure which could inhibit delivery of new housing.

Pointing to projections in the 2021/22 NSW Intergenerational Report, UDIA NSW says NSW needs to build 42,000 homes each year over the next forty years in order to meet population requirements.

Of these, 94 percent or 39,500 need to be delivered within the Greater Sydney Megaregion.

For this to happen, it says greenfield markets will need to deliver around 14,000 new homes each and every year (historically, greenfield markets account for around one-third of new housing within the region).

Assuming that each new lot supplied exactly one dwelling (i.e. each new lot had a single dwelling only), this would imply an annual production requirement of 14,000 lots of land.

As things stand, however, new lot supply is expected to fall short of this target.

Thus far, the record number of new residential lots which have been delivered in greenfield areas stands at 13,180 – well short of the 14,000 which are needed going forward.

Moreover, on current projections, UDIA NSW says the number of new available lots coming on to the market will fall short of these requirements in each year until at least 2029 (see chart).

This will result in a shortfall of 4,400 lots in 2022 and a cumulative shortfall of 25,600 lots by 2029.

Granted, a portion of this may be addressed through multi-unit construction.

As mentioned above, the stated requirement for 14,000 lots each year assumes that only one dwelling is being delivered for each lot.

To the extent that more than one dwelling is delivered on some lots, the overall lot requirements will be reduced accordingly.

Nevertheless, UDIA says the supply of available land will still need to be increased in order to meet demand.

All this is happening at a time when there is already a land shortfall following a period of strong  demand for detached housing.

In Western Sydney, there are reports of nearly 100 people applying for every lot. Over the past six months, prices in some locations have risen by 45 percent.

Furthermore, for those new lots which are expected to become available, the report warns that four out of five are subject to further constraints which could inhibit delivery of housing.

Specifically, of those lots expected to become available:

• 76 percent require sewerage infrastructure
• 70 percent require water infrastructure
• 50 percent require roads, power or a combination of the above.
• 27 percent, 25 percent and 18 percent respectively are subject to non-infrastructure constraints including VPA negotiations, flooding impact and additional issues (biodiversity offsets, government agency decisions etc.)

To overcome this, UDIA NSW has called for 21 actions.

Of these, eleven relate to the broader Megaregion whilst the remaining ten are specific to individual regions.

First, UDIA says timeframes for rezoning and precinct approvals need to be reduced.

Precincts such as Wilton West, the town centre at Marsden Park and stages 2 and 5 of Leppington remain in the early investigation phase despite having been announced eight, eight and six years ago respectively.

Throughout Greater Sydney, UDIA NSW estimates that developers currently hold around 73,000 lots which are awaiting rezoning.

In response, the group has called for several measures.

First, it has identified 32 locations which it says need to be rezoned over the next three years in order to meet demand.

For each of these locations, it has called for rezoning to be brought forward by at least a year.

By using technology to improve efficiency, meanwhile, it says rezoning timeframes could be reduced by half.

To promote accountability over the timeliness of rezoning decisions, it wants the NSW Government and local councils to publish a plan for rezoning along with targets for the timing and progression of key process milestones.

Finally, it has called for the reintroduction of the NSW Housing Supply Cabinet Subcommittee to oversee and  the delivery of sufficient homes per year to meet the demand set out in the Intergenerational report.

The subcommittee would be supported by a Housing Supply Taskforce (as recommended by the NSW Productivity Commissioner) to bring together the Department of Planning, Industry and Environment, Treasury, Department of Premier and Cabinet and key delivery agencies including Transport for NSW; Sydney Water, Hunter Water and Central Coast water authorities; and Endeavour Energy and Ausgrid.

In addition to rezoning and precinct delivery reform, UDIA NSW has called for funding of 65 enabling infrastructure projects which it has identified as being necessary to facilitate housing delivery in specific areas.

Finally, it would like action to resolve uncertainty and constraints around flooding in the North West.

Here, delivery of billions of dollars’ worth of development has been halted over concerns about the adequacy of evacuation routes in the event of flooding.

Responding on Thursday to an announcement by Planning Minister Rob Stokes that the state government will establish a taskforce to speed up delivery of new homes in regional NSW, UDIA NSW CEO Steve Mann welcomed the announcement but said that more needs to be done.

Today’s announcement by Minister Stokes is welcome however represents just the tip of the iceberg required to meet the demand predicted in the recent NSW Intergenerational Report,” Mann said.

“The release today of the UDIA NSW Greenfield Land Supply Pipeline Survey, identifies the anticipated schedule for future housing supply delivery and quantifies the barriers, which need to be resolved to bringing them to market.

“While we welcome the Minister’s announcement today to fast track developments in Sydney’s South West as a good first step, the land supply pipeline needs much greater depth to respond to demand where it occurs and coordination of enabling infrastructure to improve certainty for investment, with the goal of better housing affordability.”

The UDIA survey was conducted in May.

Responses were received from 31 organisations covering 146 land estates and approximately 130,000 potential lots.