Sydney's housing market is reeling under the pressure of soaring population growth, with recent reports highlighting stark discrepancies between demand and approved housing supply. In some areas, the demand for new homes has surged to four times greater than the available pipeline of approved dwellings.
A report on "building blackspots" has identified 81 suburbs within Greater Sydney where the growth in population significantly outpaces the number of newly approved dwellings. Between 2022 and 2025, Sydney is expected to welcome around 326,000 new residents, translating to a requirement for approximately 121,000 new homes. However, only about 97,000 dwellings have received approvals, resulting in a shortfall of roughly 24,000 homes.
Suburb Insights and Notable Shortfalls
This mismatch between new demand and supply is particularly prominent in Sydney's southern regions, including essential areas within the St George district. Suburbs such as Hurstville, Kogarah, and Rockdale-Banksia, despite ongoing construction projects, continue to face significant shortages, illustrating that visible building activity doesn't necessarily equate to sufficient housing availability.
Tom Bolst, founder of Bolst Property Group, which commissioned the building blackspots report, emphasized the sobering statistics emerging from these regions. For instance, in Hurstville-Central, the report estimates a demand for 816 new dwellings against just 201 approvals over the past three years.
“People might see cranes and assume that enough housing is being constructed, but it’s essential to assess whether the types and quantities of homes being built truly align with the burgeoning demand,” Bolst noted. “The data suggests that even where development is evident, approvals are lagging.”
Economic Pressures on Development
Bolst pointed out several factors that influence the timing and feasibility of housing projects, including interest rates, construction expenses, and pre-sale conditions. The recent RBA cash rate increase on September 29, which pushed the rate to 4.6%, further exacerbates these challenges for developers.
“Higher interest rates lead to increased mortgage repayments, limiting buyers' capabilities while raising funding costs for developers,” he explained. This shift makes it more challenging to meet pre-sale targets, contributing to project delays.
Construction costs add an additional layer of unpredictability to the equation. Bolst remarked that a singular large project might inflate a year’s approval figures unnecessarily, masking the broader issue.
Completion Rates: A Widening Gap
Further analysis by Gyde Consulting reveals that New South Wales is completing roughly 40 townhouses and apartments annually for every 100 that are under construction, a decline from around 70 per 100 noted between 2018 and 2020. Such figures highlight the pressing need for a reassessment of housing delivery processes, particularly post-approval barriers.
Jo McClellan, Senior Executive for the Planning Institute of Australia (PIA), reiterated the importance of addressing what happens after projects receive approvals, as the gap between homes under construction and those finalized should prompt a renewed focus on overcoming hurdles in housing delivery.
“The system is approving more homes, but the critical task for industry and regulatory bodies is ensuring projects reach completion,” she stated. “An expanding construction pipeline only becomes beneficial if it coincides with a rise in completed housing units.”
Stuart Ayres, CEO of the Urban Development Institute of Australia (UDIA) NSW, emphasized the urgency in prioritizing completed homes for prospective buyers. “You can’t inhabit an approval. The time from construction start to completion has significantly increased, and with this notable slowdown, we must enhance our construction pipeline or risk falling further behind housing requirements.”
Local Perspectives on New Developments
For residents like Elizabeth and Stephen Armbrister, purchasing a new home entails weighing concerns over potential construction delays against the benefits of their new lifestyle. Opting for a four-bedroom apartment off-the-plan at the Waterstone development, they expressed a degree of apprehension but were ultimately reassured by the developer’s strong reputation.
“You definitely consider delays,” Ms. Armbrister reflected. “But the excellent reputation of Sekisui House alleviated many of our concerns.”
Top Building Blackspots in NSW
Suburb New residents 2022-25 Dwellings approved FY23-25 Estimated approvals gap
Hurstville – Central 2,204 201 615
Kogarah 1,895 191 567
Spring Farm 1,646 199 350
St Leonards – Naremburn 1,540 187 546
Jordan Springs – Llandilo 1,346 80 328
Shortland – Jesmond 1,313 156 391
Rockdale – Banksia 2,107 295 515
Wagga Wagga – North 417 26 128
Liverpool – East 1,917 360 473
Bankstown – North 1,185 70 339
Source: Australia’s Building Blackspots report
As Sydney grapples with this housing shortage, addressing the barriers hindering project completions will be paramount for meeting the needs of its growing population.