It seems like the New South Wales housing market is not building enough dwellings to cater to its growing population, indicating a looming supply problem that could push prices up in the state, according to an expert.
Figures from the Australian Bureau of Statistics show a substantial monthly increase in building approvals in the state, up 52.8%. This is due to a surge in apartment approvals in the month. The growth in New South Wales resulted in the overall approvals in Australia to hit their highest level since March 2019 at 11.8%.
Despite these rosy numbers, the underlying trends are already worrying, said Urban Taskforce CEO Tom Forrest.
On an annual basis, Australia's building approvals dropped by 20%. In New South Wales, the number of private-sector houses approved dropped by 3.4%.
"The number of houses approved was the lowest in a single month since August 2013," Forrest said.
According to the Greater Sydney Commission, to reach the new housing target of 36,000 housing completions each year, over 60,000 approvals should be recorded. Over the past 12 months, however, the state only recorded 50,000 approvals.
"The planning system is the bottleneck here. Developers have land ready to create thousands of new homes in Western, North Western and South Western Sydney as well as urban renewal opportunities," Forrest said.
As approvals continue to drop well below the population growth, Forrest said prices would likely keep on inflating, posing a serious problem on affordability.
"This is alarming news for the NSW Treasury. What is clear now is that this requires more than cosmetic change. Something needs to be done to clear the backlog and significantly reduce the timeframes for having development applications approved," he said.
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