Sydney housing approvals showing signs of slowing down: Chris Johnson

GUEST OBSERVER

The data recently released by the NSW Department of Planning’s Housing Monitor indicates a drop in housing approvals while completions remain strong.

Over the last six months Sydney annual housing approvals have dropped from 58,618 in February 2017 to 51,119 in August 2017 through a consistent monthly drop.

This represents a drop of 13% which demonstrates that the housing market is slowing down. There is clearly a time lag from slowing approvals to slowing housing completions but it would appear that a trend is underway.

Housing completions are still strong with 36,097 annual completions at August 2017 down slightly from April’s 37,575 completions. On a four year average the percentage of approvals that become completions is 59% which is a worrying number. The NSW government should undertake some research into the relatively low number of approvals that transition into the construction phase.

Housing projects are becoming more difficult through tighter lending policies by banks and proposed increases in levies for affordable housing by councils which are influencing feasibility and therefore reducing the number of projects seeking approvals.

With the NSW government emphasising that the best way to help with housing affordability is through high supply numbers the current slowdown is of concern. The recently released Greater Sydney Region Plan calls for affordable housing levies to only be applied to floor space uplift where this is viable but many councils are proposing to apply levies to existing floor space as outlined in their planning documents. The removal of the cap on local development contributions also creates significant concerns for developers.

While the August annual housing completions are strong at 36,097 this figure is below the average required every year for 20 years of 36,250. In boom times Sydney’s housing completions should be above the average required.

The current housing approvals for Sydney while being below what is needed are still very high compared to the decade average. The Urban Taskforce urges the NSW government to do all it can to keep housing approvals at a high level.

Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted here.