Current housing pressures in NSW
Increasing residential rents and borrowing costs saw housing costs rise across Australia in 2022, particularly for renters and new home buyers.
Rental prices in NSW increased 11% in the 12 months to September 2022. Rental vacancy rates remain low, averaging 0.9% for regional NSW and 1.8% for Greater Sydney over the 12 months to December 2022. For owner occupiers with a mortgage, cumulative interest rate rises (from 0.1 to 3.1% over eight months) have sharply increased repayments. In regional NSW, 2022 flood events have increased housing costs with thousands of homes lost and many households in temporary accommodation.
Increased borrowing costs have also slowed dwelling construction across Australia. Tighter access to finance, coupled with ongoing materials and skills shortages, have dampened construction feasibility. Residential construction costs increased 14.2% in the year to December 2022. A recent report by Infrastructure Australia found rising construction insolvencies, fewer construction businesses available to deliver projects, and many of these operating at reduced capacity. These trends suggest further delays are expected and outcomes are increasingly uncertain.
While housing supply pipeline indicators for the December quarter demonstrate new dwelling capacity has been unlocked by the planning system in NSW, private capacity to deliver new housing remains a risk to dwelling supply. An innovative and collaborative approach will be critical to enabling new dwelling supply in NSW in the coming years.
Page last updated: 10/02/2023