According to the Urban Taskforce, the latest Housing Monitor results for Metropolitan Sydney indicate that housing completions have dropped to a mere 53% of those that receive planning approval.
“The September update of the Department of Planning’s Housing Monitor for Greater Sydney indicates that over the last 12 months there were 30,319 housing completions compared to 57,073 approvals,” said Chris Johnson, chief executive officer of the Urban Taskforce. “Only 53 per cent of the approvals seem to be converting to actual completions.”
Johnson acknowledged that there was a time lag between the approval stage and the completion stage for housing, but when the 5 year average is taken into account, there appears to be a significant problem in Sydney. “The 5 year average for completions as a percentage of approvals is 58 per cent so clearly nearly half of the approvals do not proceed,” he observed.
The Urban Taskforce believes that the excessive conditions, referrals, and levies that are required with the approval are a significant contributor to the low conversion rate, making many of the planned projects unfeasible. “Often conditions require significant upgradings of local roads, referrals to State Government agencies that require payment for works and an increasing number of affordable housing levies,” said Johnson.
“Our main concern is that the conversion rate from approvals to completions seems to be going down with this [year’s] rate of only 53 per cent compared to the 5 year average of 58%.”
While the NSW government tends to focus on approvals for housing performance, Johnson suggests the real focus should be on the number of new homes completed. The Department of Planning and the Greater Sydney Commission need to focus on how they can make more planning approvals cross over into fully-realised projects.
“The Urban Taskforce is concerned that governments seem to be adding more constraints and levies to approvals through Value Capture levies and Affordable Housing levies. Sydney needs an average of 36,300 new homes each year for 20 years. In boom times like we have now this should be over 40,000, yet the current yearly figure is only 30,319 new homes. To get another 10,000 homes built each year in Sydney we need to convert 70 per cent of approvals rather than the current 53 per cent but adding more taxes and levies is likely to drive the conversion rate down rather than up.
“A significant concern with the number of conditions on approvals is that the…banks are not lending on the basis of these extra costs so this is reducing the supply of housing in Metro Sydney with the inevitable consequence that housing costs go up, making affordability even harder for first home buyers."
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