The research by Ross Kendall and Peter Tulip presents a very disturbing picture of how much cost has been added to houses and apartments in Sydney. Restrictive zoning has added $489,000 to the price of an average Sydney house and around $400,000 to the price of the average apartment.

These are massive amounts of money that are clearly impacting on housing affordability in Sydney. The problem seems to be most extreme in Sydney as the extra for Melbourne is $324,000 and for Brisbane $159,000. The same impact is occurring for apartments with the RBA saying that restrictive zoning has added $400,000 to the price of an average Sydney apartment compared to $120,000 for Melbourne and $110,000 for Brisbane.

Clearly restrictive zoning which is driven by community concerns about change is the biggest component of Sydney’s housing affordability crisis. The NSW Government must loosen up these restrictive zoning policies across Sydney to help with affordability.

A recent report by the Grattan Institute also raised the issuer of restrictive zoning having a negative impact on housing affordability. Their report stressed the importance of high order jobs in the Sydney CBD leading for the need for more homes in inner and middle ring suburbs. They specifically called for the state government to encourage greater density in these areas.

Unfortunately the Greater Sydney Commission’s District Plans now prohibit the renewal of old industrial sites in inner suburbs even where another government agency, UrbanGrowth, has developed plans along Parramatta Road that promote new residential development.

The RBA Report along with The Grattan Institute Report provide a wake-up call to the NSW Government, the Greater Sydney Commission and to Sydney councils to urgently review restrictive zoning policies so  that housing can be more affordable.