As someone deeply involved in the NSW property market, I’ve closely followed our state’s housing challenges.
Under the National Housing Accord, NSW needs to build 377,000 new homes by mid-2029—a tough task when we’re already falling short.
If we don’t act, we risk turning Sydney into what some are already calling a “city with no grandchildren”—a place where young professionals and families are pushed out, leaving behind only older generations.
The NSW Productivity and Equality Commission recently issued a report titled “Review of housing supply challenges and policy options for New South Wales.” It really digs into some of the big hurdles we’re facing and offers some innovative strategies to tackle them head-on.
This Report lays out several ideas to create more building opportunities and fast-track solutions to reach these targets.
From my perspective in the market, it’s clear that saying no to building has cost young families dearly, both financially and personally. Essential workers—like teachers, nurses, and first responders—are often priced out of the communities they serve, making it even harder for our city to thrive.
Imagine a nurse who spends hours commuting because she can’t afford to live near her hospital or a young teacher struggling to find affordable rent near their school—this is the reality we need to change.
We must shift towards practical, real-world solutions that make our housing market more diverse, accessible, and sustainable for future generations.
Root Causes and Proposed Solutions
A. Construction Sector Capacity Constraints
A major issue right now is the pressure on our construction sector.
There’s fierce competition between housing construction and major infrastructure projects, pulling resources in different directions. NSW needs around 30,000 more builders, tradespeople, and skilled workers just to keep up with the housing demand.
From conversations I’ve had with developers and builders, many are drawn to lucrative government infrastructure projects over residential developments, leaving the market struggling to keep pace with housing needs.
One of the key suggestions is to shift public spending to free up more capacity for housing and invest in expanding the construction workforce through training and skills migration.
The goal is also to make areas more attractive to both developers and homebuyers by putting housing-related infrastructure first.
B. Development Feasibility Issues
Another significant barrier I’ve seen is the feasibility of new developments. Rising costs have made many projects feel impossible. The report breaks this down into a few main factors:
- High interest rates are making it more expensive for developers to finance projects
- Construction costs have risen significantly, eating into potential profits
- Land prices, especially in desirable areas, continue to be a major concern
These hurdles make it tough for developers to justify new projects, which means fewer homes get built. And while subsidies and tax breaks sound helpful, they often just drive up demand without adding more homes.
One practical solution is allowing buildings to go taller—adding more levels to approved structures.
Increasing building heights, especially in high-demand areas, could help create more housing without needing extra land, meeting targets faster and making better use of existing infrastructure.
Allowing greater density where people actually want to live could make a meaningful difference. By building more homes in these spots, we could start to close the gap between supply and demand.
C. Regulatory and Process Bottlenecks
The complexities of our development approval process can’t be ignored.
Even after projects get the green light, working through the red tape can drag out the process, delaying new homes when they’re needed most.
Proposals include expanding exempt and complying development categories, making the process less tedious.
And it’s time we get more innovative with how we build—methods like prefabrication and modular building could help us build homes faster and more efficiently over time.
Ensuring Housing Diversity and Equity
I work with clients from all walks of life, each with unique housing needs. That’s why I’m particularly interested in how the report addresses housing diversity and equity.
It touches on an issue I’ve long observed—the need for a variety of housing types to cater to different demographics. It suggests encouraging a mix of housing options, including apartments, townhouses, and detached homes.
Young professionals often prefer smaller apartments in urban centres, while families might seek larger homes with yards. Then, there are downsizers looking for low-maintenance options close to amenities.
We need to leverage existing infrastructure by expanding development near transport hubs, making housing more accessible and connected.
What really caught my attention is the need for ‘missing middle’ housing—duplexes, townhouses, and small apartment buildings. These can provide a great middle ground for those who want more space than an apartment but can’t afford a detached house in their preferred area.
And it’s especially critical for keeping essential workers close to their jobs so they’re not forced into long commutes that strain their time and finances.
And let’s not forget social housing.
Investing in this, alongside boosting overall supply, can help ease pressure on the private rental market while ensuring support for our most vulnerable community members.
Implementation and Future Outlook
Looking ahead, some actions could be implemented relatively quickly, such as relaxing certain planning restrictions in high-demand areas. I’m keenly aware of the pent-up demand in many well-located suburbs. Allowing for increased density in these areas could make a significant difference.
Other recommendations, like growing the construction workforce and encouraging innovation in construction methods, will take longer to implement but are crucial for our long-term capacity to deliver housing.
If these recommendations are implemented effectively, we could see some significant changes in the NSW housing market.
We might expect:
- More housing options in desirable areas, potentially improving affordability
- A greater variety of housing types to suit different needs and budgets
- Faster delivery of new homes, helping to meet demand more quickly
- Potentially, a more stable market with supply better matched to demand
Conclusion
Reflecting on the report, I’m impressed by both the scale of our housing challenge and the potential for meaningful change.
While the situation in NSW is undoubtedly complex, this proposed roadmap offers a clear path towards a more balanced and accessible market. It’s encouraging to see that the focus extends beyond simply increasing housing numbers.
Instead, it emphasises creating the right kind of housing in the right locations, ensuring our cities remain vibrant and full of potential.
The recommendations—boosting construction capacity, streamlining regulations, and growing our workforce—address the core issues driving our housing shortfall.
It won’t happen overnight, but with steady commitment, NSW can truly become ‘the housing state’—a place where everyone, no matter their stage in life, can find a home.
As we move forward, having expert guidance is key. If you’re buying your first home, investing in real estate, or planning your next move, you don’t have to do it alone.
Reach out for a free consultation, and let’s work together to find the right property for your needs in this evolving market.
