The volume of new housing supply which will become available throughout Greater Sydney may hit its lowest level for almost 70 years in two years’ time, an industry lobby group has warned.
Releasing its latest forecasts, the Urban Development Institute of Australia New South Wales said that in absence of government intervention, it’s ‘worst case scenario’ would see the number of new dwelling completions throughout Greater Sydney fall to just 9,256 in calendar 2022.
This will represent the lowest level of completions on record in any calendar year since 1953 and will be down on the roughly 40,000 completions achieved at the peak of the construction boom during calendar 2018 to the tune of 77 percent.
The number is also well-shy of the volume of dwellings which the Greater Sydney Commission says is needed over the twenty-years from 2016 to 2036 in order to keep pace with housing needs.
In its vision for a metropolis of three cities, the Commission said Greater Sydney will require 725,000 new dwellings over that time.
Moreover, the projections – which draw from several different sources and are based on a combinations of development approvals and research undertaken into projects which are currently under construction or likely to commence shortly and are on track for completion between now and 2022 – predate COVID-19 and cannot be explained by coronavirus related factors.
Rather, the are being driven by a pipeline of supply which has been shrinking since approvals of new dwellings began falling from their peak in 2016.
Since then, UDIA NSW chief executive officer Steve Mann says, new dwelling approvals have fallen by 46 percent and apartment approvals specifically have plummeted by 62 percent.
The latest forecasts follow UDIA NSW’s recent release of ten action points over the immediate, short and medium term which it says will assist the state’s housing sector to recover from COVID-19 and help to drive economic recovery in that state.
Under these points, the UDIA has called for actions such as keeping construction sites open, delaying payment of government and council contribution and charges, finalising rezoning and approvals, investing in infrastructure, fast-tracking rezoning, providing direct financing (debt) to projects which 50 percent or greater presales, introducing a four-month stamp duty exemption for new/off the plan home purchases and removing the foreign investor surcharge for new/off the plan sales.
Mann says intervention is needed to support the sector.
“The research shows we are on track for the lowest dwelling completions since 1953,” he said.
“There were 9,047 dwelling completions in 1953.
“With dwellings approvals declining 46% since the peak in 2016 the upcoming number of new homes being built in Sydney will be very low. A decline in supply, construction jobs and affordability will naturally follow suit, and we will end up critically damaging Sydney’s housing market in the short to medium term.
This will have a devastating impact on Sydney and the regions from the Illawarra to the Hunter where growth occurs, but also across the State with the development supply chain supporting many regional communities.
“The focus must be targeted interventions that will enable new housing to be delivered now and a pipeline for growth into the future.”