At the centre of the Albanese Government’s National Housing Accord is a commitment to deliver one million homes nation-wide over 5 years. 

We are getting close to one year in and things look grim.

NSW comprises approximately 32% of Australia’s housing development.  NSW will therefore need to deliver 320,000 of those 1 million new homes to meet its share. That’s 64,000 new dwellings, each year, over 5 years.

To put that in perspective, in 2021-22, there were just over 47,000 new home completions across all of NSW and it looks like a lower number will come in this year. NSW needs to pick up the pace and do so quickly or the National Housing Accord commitment looks unlikely.

The Commonwealth Government has committed to deliver 20,000 new social housing dwellings plus 20,000 new affordable homes. If you use the same percentage for the NSW component of this commitment (32%), the Commonwealth would deliver 12,800 social and affordable homes as part of their five-year undertaking – or 2,560 social and affordable housing dwellings annually.

The Commonwealth commitment to deliver 2,560 social and affordable homes each year in NSW, while certainly welcome and needed, will not really scratch the surface of the Housing Supply Crisis.

This breakdown of the figures reveals the magnitude of the total Housing Accord commitment and the critical role that will need to be played by the private sector if we are to have any hope in achieving the target.

Remember, NSW needs 64,000 new homes a year to meets its share of the Accord deal and they are already well behind par.

It is clear that the lions’ share of new housing supply – indeed, 96% of the target Housing Accord new housing stock – will need to be delivered by the private sector.  This requires targets, incentives, planning approvals and a much faster process.

These figures highlight the need for a constructive dialogue with the private sector on how we can deliver on the Commonwealth Government’s ambitions, and it brings into sharp focus the important role of the State Planning systems in driving (or inhibiting) this objective.

An area where there needs to be more political attention and leadership is the role of State planning agencies, as a supporter of these goals.  If success is to be realised, they are a key partner.

A recent report authored by Peter Tulip of the Centre for Independent Studies “Where should we build new housing?” highlights the role of the NSW planning system in inflating prices and through the GCC’s housing targets.  The paper details the GCC’s lack of a clear rationale or evidentiary basis for targets set to date and says the result has been to effectively distort the allocation of housing across the Sydney basin.

Significantly, Tulip charts the distortion and identifies the privileged suburbs in Sydney’s east and North Shore, where Councils and residents have been protected through low GCC targets despite rapidly rising prices which reflect strong demand for new housing.

Some councils have simply turned their back of the challenges faced by a growing Sydney – pushing the burden of catering for a growing population largely to Sydney’s west.

Peter Tulip usefully identifies 3 components that must all be included when setting local Housing targets.  He finds that these have been manifestly overlooked by the Greater Cities Commission and this has contributed significantly to the current crisis. The targets need to cater for:

1. Anticipated population growth
2. Catch up on the undersupply of housing over the past two decades
3. Additional supply necessary to place downward pressure on housing prices.

Housing targets must focus on all three factors.  Our planners have unfortunately set their targets based on the first, and even then, they have been way too low.

Let’s be positive – what CAN we do?

Urban Taskforce has identified seven short term initiatives which would help address the housing supply crisis and support the private sector in the delivery of the Commonwealth’s housing target.

The current housing supply crisis has evolved through a confluence of significant local and external factors. Some of those that State Governments have little or no control over include interest rates rises, inflation, the war in Ukraine, floods and bushfires (and the associated increase in costs), and COVID (and the associated labour skills and general labour shortages). But there are some things that are entirely within the control of the State Government, and this is where we must focus our attention.

Creating short to medium term pathways for the supply of additional housing is critical to solving the housing supply crisis. Every chance must be taken.

Urban Taskforce promotes the State Government and the private sector working closely with Councils who have shown a capacity and willingness to deliver homes for a growing Sydney. These Councils should be rewarded with additional funds for local and community infrastructure.

On the other hand, those that have turned their backs on housing supply must face consequences and sanctions. There must be short shrift shown to free riders.

Peter Tulip’s recent report provides a solid intellectual platform which articulates and quantifies the problem. It is time we all got together to work constructively to address the housing supply crisis, put downward pressure on house prices and improve affordability.

The National Housing Accord and housing affordability depend upon it.