NSW Department of Planning and Environment

Trends in housing supply

Following rapid population growth in the late 2000s and early 2010s, NSW had an estimated shortfall of 100,000 dwellings in 2016. In 2021, the NSW Productivity Commission white paper found higher construction rates and declining net immigration during the COVID-19 pandemic had mostly absorbed this shortfall.

Historically, there is a lag of around 2 years between approvals and completions (more for large high-rise projects). About 97% of projects with construction approval are completed, with only a small proportion significantly delayed, changed or discontinued. This can be due to a range of factors such as changing market conditions (where projects are no longer feasible), difficulties accessing finance or shifting developer priorities.

Since 2016, NSW has consistently completed more than 47,000 dwellings each year. This suggests that the NSW housing market is on track to deliver the 45,200 new dwellings per year needed to accommodate projected future demand. However, we need a collective effort to monitor and maintain the pipeline of potential supply in the face of significant challenges.

For example, shortages of both materials and labour are currently affecting construction activity in NSW and are expected to remain a challenge in 2022–23.

A reliable pipeline of housing supply opportunities in the right areas will support accelerated housing delivery once market conditions stabilise. This will position NSW to contribute towards the proposed National Housing Accord target to deliver 1 million new homes across Australia over 5 years from mid-2024, announced in the October 2022 Federal Budget.

Historic housing construction approvals and completions in NSW

Graph showing housing construction approvals and completions for NSW over the past 30 years. The long term average is around 48,000 approvals per year and 43,000 completions per year. Both approvals and completions have been above the 30-year averages since around 2015.

Source: Australian Bureau of Statistics 2022, Department of Planning and Environment analysis

 

Housing supply delivery in Greater Sydney

In Greater Sydney, an average of 30,000 dwellings were approved for construction each year over the past 30 years. In the past decade approvals have increased to 42,600 per year on average, due to improved economic conditions and new planning reforms. In 2021–22, there were 35,800 construction approvals and 24,600 completions.

 

Housing supply delivery in regional NSW

Across regional NSW, construction approvals averaged 18,300 dwellings per year over the past 5 years, slightly above the long-term average. Construction approvals reached 19,200 in 2021–22.

 

Historic housing construction approvals in Greater Sydney and regional NSW

Graph showing housing construction approvals for Greater Sydney and regional NSW over the past 30 years. The long term average is around 30,000 approvals per year for Greater Sydney, and around 18,000 per year for regional NSW. Sydney approvals reached a peak around 59,000 per year in 2016, while regional approvals have remained closer to the average over the long term.

Source: Australian Bureau of Statistics 2022, Department of Planning and Environment analysis

Page last updated: 07/11/2022