Almost 30,000 fewer homes will be built in Sydney over the next five years compared with the number of homes built during the last half-decade, the latest forecast suggests.

Published by the NSW Department of Planning Industry and Environment, the latest report provides a forecast of future housing supply across the Greater Sydney Metropolitan Areas based on current housing approvals and construction activity as well as projected take-up of land which is zoned for housing.

According to its ‘central base scenario’ the Department expects that 154,550 new dwellings will be completed across metropolitan Sydney over the five years to June 2025.

This is below the 181,650 dwellings which were completed over the past five years.

Source: Sydney Housing Supply Forecast 2020, NSW Department of Planning, Industry and Environment

Caution should be observed, however, in comparing expected completion numbers with numbers from the past five years as recent years have seen abnormally high levels of new home construction.

Indeed, compared with the 100,213 dwellings which were completed in the five years to June 2015 prior to the recent boom, the forecast completion numbers indicate healthy levels of activity.

According to the Department, the slowdown in completions will stem from two factors.

Even before COVID, the pipeline of new housing supply had been contracting as numbers of new home approvals and commencements had eased from record highs.

Beyond that, COVID has affected demand for new housing due to its impact upon immigration, economic conditions and employment activity – albeit with this having been partly offset by the Commonwealth HomeBuilder program.

At least over the short-term, meanwhile, COVID has also driven a shift in preference away from inner urban apartments toward lower density homes in outer-metro and regional areas.

Source: Sydney Housing Supply Forecast 2020, NSW Department of Planning, Industry and Environment

Beyond aggregate numbers, the forecasts highlight a continued shift in housing provision throughout Sydney away from the city’s eastern core and toward the Central City in and around Parramatta and the Western Parklands City near where the new airport is being built at Badgerys Creek.

By local government area (LGA), the Department expects that the outer western Blacktown LGA will be the biggest hotspot for new housing provision over the next five years.

Meanwhile, LGAs such as The Hills and Cumberland will replace inner municipalities such as Bayside as the focus of activity.

This, the Department says, reflects several factors.

First, there are a large number of greenfield development sites which feed into the Central City and Western City urban centres.

Within these centres, there is also an expanding volume of high-density developments.

More broadly, anticipated dwelling growth in these areas is consistent with expectations about long-term population and employment growth in and around Parramatta as well as in areas which will surround the new airport.

Development and population growth in these areas forms a critical part of the Greater Sydney Commission’s plan to transform Greater Sydney into a metropolis of three cities by 2040.

At the same time, the pace of new dwelling completions and supply additions in the city’s established Eastern Core is expected to ease over coming years as many high-rise projects have either reached completion or are nearing completion.

Source: Sydney Housing Supply Forecast 2020, NSW Department of Planning, Industry and Environment

NSW Minister for Planning and Public Spaces Rob Stokes said the forecasts underscored the need to avoid complacency in planning during COVID.

Despite the pandemic, he says long-term housing and land development targets need to be met.

“We must continue to build housing and infrastructure for a growing and ageing population in Sydney,” Stokes said.

“Forecasts show last year will only be a speed bump in Greater Sydney’s housing demand and the NSW Government is alive to the housing, public space and infrastructure needs of our diverse communities.”