The latest Housing Monitor results for Metropolitan Sydney indicate that housing completions have dropped to only 53 per cent of those that receive planning approval.
“The September update of the Department of Planning’s Housing Monitor for Greater Sydney indicates that over the last 12 months there were 30,319 housing completions compared to 57,073 approvals.” says Urban Taskforce CEO Chris Johnson “Only 53 per cent of the approvals seem to be converting to actual completions.”
“There will be a time lag between the approval stage and the completion stage for housing but when the 5 year average is taken into account there does seem to be a Sydney problem. The 5 year average for completions as a percentage of approvals is 58 per cent so clearly nearly half of the approvals do not proceed.”
“The Urban Taskforce believes a significant part of the low conversion rate is because of excessive conditions, referrals and levies that are required with the approval that make projects unfeasible to be realised. Often conditions require significant upgradings of local roads, referrals to State Government agencies that require payment for works and an increasing number of affordable housing levies.”
“Our main concern is that the conversion rate from approvals to completions seems to be going down with this years rate of only 53 per cent compared to the 5 year average of 58%.”
“There is a trend towards larger sized apartment projects with 71 percent of completions for Sydney this year being for apartments and 65 percent of these are for projects of 50 or more housing units with most of these having over 100 units.”
“The State Government tends to focus on approvals for housing performance but the real focus must be on the number of new homes completed. Clearly the Department of Planning and the Greater Sydney Commission must now focus on how to make more planning approvals lead to real projects. The Urban Taskforce has presented examples of how conditions of approval are slowing down housing completions to both the State and Federal Governments and we are keen to work with all levels of government to improve the planning system.”
“The Urban Taskforce is concerned that governments seem to be adding more constraints and levies to approvals through Value Capture levies and Affordable Housing levies. Sydney needs an average of 36,300 new homes each year for 20 years. In boom times like we have now this should be over 40,000 yet the current yearly figure is only 30,319 new homes. To get another 10,000 homes built each year in Sydney we need to convert 70 per cent of approvals rather than the current 53 per cent but adding more taxes and levies is likely to drive the conversion rate down rather than up.
“A significant concern with the number of conditions on approvals is that the the banks are not lending on the basis of these extra costs so this is reducing the supply of housing in Metro Sydney with the inevitable consequence that housing costs go up making affordability even harder for first home buyers.”