New Research says apartment could be the key to housing supply crisis

UDIA NSW released a significant piece of research on the NSW apartment market, revealing that without a NSW Government intervention, the home ownership rate will continue to fall, and we will see more people living in poverty.

The UDIA NSW Apartment Supply Pipeline Report 2021 reveals that apartments represent two thirds of the new housing market, and therefore play a critical role for those who are trying to get onto the housing ladder as well as those on lower incomes who are unable to afford the escalating purchase prices.

Based on the long-term demand identified in the NSW Intergenerational Report and the historical dwelling type development ratio, at least 20,500 new apartments are needed in Sydney each year, however, apartment completions estimated by UDIA NSW, are forecast to collapse to just 6,850 new dwellings in FY22.

“Given the severe lack of new apartments coming online, we expect this to put further upward pressure on rents and prices, exacerbating housing affordability issues,” said Steve Mann, CEO, UDIA NSW.

The Productivity Commission White Paper 2021, identified a backlog of 40,000 dwellings of unsatisfied demand. Assuming all currently forecast apartment projects were to be completed without delays, supply would still fall short of the estimated increases in demand between now and mid-2026, with cumulative unmet demand estimated to reach at least 60,000 units.

If this backlog of unmet demand is to be reduced, we need to see supply completions in excess of new demand, meaning new starts of 25,000 to 35,000 apartments per annum would be needed over a number of years.  The UDIA NSW survey highlighted three key issues that need to be tackled if we are to provide that apartment supply:

Issue 1 – Reducing barriers to construction finance.

Issue 2 – Removing barriers to feasibility.

Issue 3 – Improving the VPA process.

Key risks to Apartment market supply:
Based on a UDIA survey of development members, 72% of apartments that are expected to be completed as part of large projects in NSW by the end of FY26 are facing constraints impacting whether developers will proceed with these projects. UDIA estimates that without intervention, up to 13,000 units in the project pipeline risk being deferred or abandoned. See graph below:

If the NSW Government followed our recommendations and rents fell closer to the rates seen in Melbourne, the average renter in Sydney would save between $4,000 and $5,000 per annum, a huge reduction for those on the lowest incomes.

About the research:

The aim of UDIA’s Apartment Supply Pipeline Report 2021 was to identify issues and propose solutions to improve apartment affordability and investigate the extent to which the expected increase in demand for apartments can be met by the current pipeline of apartment construction projects.

ENDS

Media Enquiries:
Deanna Lane 0416 295 898 or dlane@udiansw.com.au.
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UDIA NSW Welcomes new Housing SEPP released today

Today’s announcement by Minister for Planning & Public Spaces Rob Stokes, on the new Housing State Environmental Planning Policy (SEPP) has been welcomed by UDIA NSW as it demonstrates that government have not only listened to industry feedback but taken this into account when finalising the policy.

UDIA has been a strong supporter of the policy to provide diverse housing opportunities through simplified planning pathways and incentives, however there were aspects of the draft Housing SEPP that caused concern and we made some recommendations in our submission in August this year.
The key points from our submission recommended a number of changes to the exhibited draft SEPP, including:

  • Reinstate the intent of the policy to promote and deliver diverse, affordable and seniors housing products.
  • Reverse the decision to prohibit seniors housing and boarding houses from the R2 low density residential zone.
  • Reconsider the accessibility and local character requirements so as not to further restrict these products, and
  • Undertake economic modelling to understand the impact of the proposed changes on feasibility, crucially important for this sector where feasibility is marginal.

UDIA is encouraged to see that government listened to these concerns and has made a number of positive changes to the final policy which include:

  • Permitting seniors independent living developments in R2 – Low Density Residential zone,
  • Permitting Co-living housing (including boarding houses) anywhere residential flat buildings or shop top housing are permitted under another environmental planning instrument including the R2 – Low Density Residential zone, and
  • Amending the requirements regarding local character to include ‘desired future character’.

There remains concern that the reduction in incentives for seniors and affordable housing and the continued restriction on affordable housing and some seniors housing products within the R2 low density residential zone, will have the effect of making development unviable and reduce supply of these much needed housing types in NSW.

“There are many challenges with the successful delivery of affordable and seniors housing beyond just the Housing SEPP and we look forward to working with the NSW Government to ensure that these vital housing products can be produced in NSW,” said Steve Mann, CEO UDIA NSW.

ENDS

Media Enquiries:
Deanna Lane 0416 295 898 or dlane@udiansw.com.au.
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UDIA NSW seeks a balanced package of proposed changes to Infrastructure Contributions Reform

UDIA NSW is concerned that changes to reforms of the infrastructure contributions package, agreed between NSW Government and the Local Government NSW, will impact feasibility, housing supply and affordability.

“The government will need to offset these increased costs by reducing development costs elsewhere. The process of picking apart the reform is fraught and needs a broader review to assess the impacts of other recommendations and how they will affect feasibilities, ie. Regional Infrastructure Contribution,’ said Steve Mann, CEO, UDIA NSW.

UDIA NSW supported the Productivity Commissioner’s position on the essential works list which stated contributions plans reflect development-contingent costs only. Essentially the Minister has agreed with LGNSW to move away from Recommendation 4.6 and we are concerned with this.

“This type of policy reform focussed on productivity gains is desperately needed in NSW and that is why development was one of the first industries reviewed by the Productivity Commissioner,” added Mr Mann.

Whilst UDIA supports development of place building infrastructure, this should not solely be a developer based cost, which will be paid for by new home buyers it should be covered under other taxation regimes.

The reforms need to strike the right balance between the owners of new homes and community facilities for the wider community.

In relation to the modifications to the package, UDIA supports ensuring that state contributions are spent in the region where they are collected and the use of the blanket rate in the section 7.12 plans.

UDIA Presidents Infrastructure Contributions Taskforce will continue to advocate for a more even balanced contribution system that does not impact negatively on housing supply. This is essential to enable the construction industry to recover from the post pandemic challenges.

”Infrastructure contribution is a finely balanced package, if the government unpicks one part of the package the whole reform could collapse. We think this is an important reform to improve productivity in NSW and we will work with the government to ensure it works as a complete package.” said Mr Mann.

ENDS

Media Enquiries:
Deanna Lane 0416 295 898 or dlane@udiansw.com.au.
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UDIA NSW Congratulates Deerubbin Local Aboriginal land Council on major milestone

UDIA NSW is delighted to see the announcement today by the Minister for Planning & Public Spaces on the major agreement between the NSW Government and the Deerubbin Local Aboriginal Land Council (DLALC) which will support the development of land managed by DLALC in Western Sydney, while protecting 1,100 hectares of important woodlands on the Cumberland Plain.

Even more welcome, was the statement by Minister Stokes that preparation of the biodiversity assessment and approvals for Deerubbin’s Penrith Structure Plan will be fast-tracked, providing economic opportunities for Aboriginal people while securing more land to be protected under the NSW Government’s Cumberland Plain Conservation Plan.

Acknowledged by Minister Ayers as a significant landholder in Western Sydney, DLALC has been actively working to ensure a reasonable supply of land for Greater Sydney’s future housing needs and to ensure a balance between the competing goals of housing supply and biodiversity conservation.

UDIA sees this as a fantastic result and an exemplar case study for Aboriginal communities generally.

“The outcome announced today was due to great vision, leadership and perseverance over many years by DLALC and UDIA was pleased to lend our support for such a major win for DLALC as a UDIA Member,” said Steve Mann, UDIA NSW CEO.

This agreement is particularly important as the DLALC Structure Plan was designed to achieve the following:

  • Address the critical need to solve Greater Sydney’s lack of burial land
  • Provide the basis for a thriving, internationally significant agribusiness precinct
  • Ensure the proper activation of the North West sector of Western Sydney as envisaged by the Greater Sydney Commission from now until 2056

UDIA congratulates DLALC on achieving this significant milestone which will make a great contribution to Sydney and the Deerubbin LALC’s future.

ENDS

Media Enquiries:
Deanna Lane 0416 295 898 or dlane@udiansw.com.au.
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UDIA NSW calls for investment in enabling infrastructure to address Regional Housing Crisis

UDIA congratulates the Regional Housing Taskforce on identifying the challenges for housing in NSW regional markets, and on producing a solid set of five recommendations and fifteen actions that will support much-needed supply across all housing types in the regions.

The regions are facing similar housing challenges to Sydney – including low supply, and higher costs with house prices having risen in the regions by 48% over the past two years vs. 32% in Sydney during the same period.

UDIA has been advocating for State government intervention focused on building a sustainable supply pipeline of ‘Development Ready’ land that is zoned, fully serviced and with biodiversity arrangements in place. Each of the key recommendations are aligned with UDIA’s research and experience on the ground in our regional Chapters and recognise the growing housing stress in the regions, where demand has been outstripping supply for many years.

“We have a once-in-a-generation opportunity to build durable, development-ready supply pipelines that can meet demand, produce a more balanced housing market and make home ownership more affordable. Zoned land will not deliver housing unless it has the right infrastructure water, sewer, power and roads, together with biodiversity approvals and there is often a missing piece which delays development and should be the focus to unlocking supply,” said Steve Mann, CEO, UDIA NSW.

UDIA calls on government to quickly implement the Taskforce’s recommendations to ensure adequate and affordable supply of housing in the regions, through:

  1. Establishing enhanced UDP Committees and better cross-government coordination to support development-ready land and effectively plan for adequate housing supply;
  2. Accelerating housing delivery by creating a $1bn fund to be invested over three years (like the Housing Acceleration Fund) to build enabling infrastructure, with proportional allocation to each region;
  3. Creating a sustainable housing pipeline by accelerating approval of current proposals and encouraging more housing diversity.

“We are pleased that the Taskforce recommends a strong role for Urban Development Program (UDP) Committees in each key region, to improve alignment across government and industry to support the delivery of new housing. The most important factor in achieving the outcomes sought through the Regional Housing Taskforce findings and recommendations will be the step-change needed to bring real coordination across government, coupled with investments to support new housing in the regions and the timing of the implementation of these recommendations.” said Steve Mann, CEO.

UDIA’s Building Blocks 2021 research reports outline where the enabling infrastructure needs to be delivered in key regional markets including the Hunter, Central Coast and Illawarra Shoalhaven with a total $879 million needed and provides a foundation for the UDP Committees’ work.

Development-ready land must also have all environmental assessments and biodiversity offsets agreed. We are quickly running out of housing supply in key regional markets because of the biodiversity regulatory system. We welcome the Taskforce’s recognition that biodiversity is a major constraint on regional housing and is an important component in considering “development-ready” land supply. UDIA is working with government on several initiatives to improve the biodiversity system by reducing complexity and increasing certainty, which are aimed at increasing housing supply, while also protecting the environment.

UDIA is pleased to see the Regional Housing Taskforce’s acknowledgement of the need for reforms to infrastructure contributions and implementing complementary initiatives to sequence and prioritise infrastructure contributions plans, targeted grant programs and low-cost loan schemes.

We look forward to working with NSW Government to implement the Regional Housing Taskforce recommendations.

ENDS

Media Enquiries:
Deanna Lane 0416 295 898 or dlane@udiansw.com.au.
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