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{{propApi.successMessage}} {{region}} Change locationNew South Wales set to fall 120,000 homes short of target (NSW)
New South Wales set to fall 120,000 homes short of target (NSW)
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HIA recently released its Economic and Industry Outlook report. The report includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories.
“The high cost of residential land, particularly in Sydney, is preventing a strong increase in housing supply needed to house its existing and growing population,” added Mr Armitage.
“Low unemployment, ongoing population growth, low vacancy rates and a cut to the cash rate should help entice more buyers into the new home market, but supply-side barriers are preventing them from getting into a home.
“As it stands, New South Wales is set to commence construction of just 252,060 dwellings in the five-year period from 2024/25. This is over 120,000 homes short of the state’s share of the national target.
“Multi-unit starts, which include semi-detached, townhouses and apartment units, are forecast to remain at decade-low levels in 2024/25 and 2025/26.
“The multi-unit sector will be constrained unless policy changes are made to attract, not impede, the needed investment to get apartment construction online.
“Detached housing starts fell to decade-lows in 2023/24 at just 21,200 and are expected to fall even further in the 2024/25 financial year. The high cost of land will remain a ceiling to growth, with only a very modest pick-up expected from 2025/26 onwards.
“While there were some housing policy announcements of merit in NSW over 2024, the practical delivery and speed of implementation has not matched the hype.
“The NSW Government’s ‘missing middle’ policy to encourage construction of low- to mid-rise housing announced in December 2023 was billed as a scheme to deliver more than 112,000 homes (30 per cent of the State’s National Housing Accord target).
“However, delays have arisen from local council elections and councils are given far too much scope to prevent building dual occupancies on underutilised blocks of land. There is simply too much uncertainty over the policy and it is stalling the delivery of these new homes.
“It’s been almost 15 months since the announcement and meanwhile unit construction is still rattling around the bottom of the barrel at decade low levels.
“In addition, Sydney’s glaring shortfall of Greenfield land available for residential development is becoming more dire by the day. A failure to rezone sufficient land for residential development, inadequate funding and delivery of essential infrastructure, and uncertainty in messaging from key State Government Ministers; is fuelling a vacuum of Greenfield land for housing.
“Specific policy announcements backed by rock-solid implementation plans to rezone and develop Greenfield land for residential development is needed urgently,” concluded Mr Armitage.
New Home Building Forecasts
Detached houses: There were 5,190 detached houses that commenced construction in New South Wales in the September quarter 2024, which was 1.7 per cent lower compared to the previous quarter. Detached starts are expected to fall to 5,140 in the December quarter 2024 and pick up in the March and June quarters 2025 to 5,310 and 5,540 respectively. This would bring the number of detached starts in 2024/25 to 21,180, which is relatively unchanged (-0.1 per cent) compared to the previous year. Detached starts are expected to pick up in 2025/26 by 11.2 per cent to 23,560, followed by a 1.8 per cent increase in 2026/27 to 23,990.
Multi-unit dwellings: There were 6,010 multi-unit dwellings that commenced construction in New South Wales in the September quarter 2024, which was 21.6 per cent higher compared to the previous quarter. Multi-unit starts are expected to fall to 5,550 in the December quarter and pick-up modestly in the March and June quarters 2025 to 5,660 and 5,730 respectively. This would bring the number of multi-unit starts in 2024/25 to 22,950, which is 19.0 per cent higher compared to the previous year’s 12-year low. Multi-unit starts are expected to increase by 5.9 per cent in 2025/26 to 24,300 and in 2026/27 to 27,170.
To purchase our HIA State and National Outlooks, please visit the HIA website.
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