Minister Stokes lights a fire under NSW council planners to drive housing supply
EXPERT OBSERVER
The NSW Minister for Planning has released an analysis of housing demand and supply trends which highlights the urgent need for more and faster housing approvals if massive price rises are to be avoided.
Urban Taskforce welcomes the frank assessment which clearly states the need for more housing and more infrastructure to support our growing and ageing population.
DPIE Housing Demand forecasts are based on the Greater Sydney Commission’s (GSC) 2016 numbers – which find the over the next 20 years (2016 – 2036) the number of new homes in Greater Sydney needed will be 725,000 (36,000 per year).
The Draft NSW Housing Strategy Discussion Paper and Fact Book released by Minister Pavey and Minister Stokes in May 2020 was clear that the forecast for Growth in the population of Greater Sydney had grown and so too had the forecast need for new homes. The May 2020 document is clear in stating that there will need to be 1 million new homes in the 20 years between 2020 and 2040 (that means 50,000 new homes every year).
The big question is: why is DPIE still clinging to the old data? The 2020 Housing Strategy documents were based on sound analysis by DPIE staff and were informed by Demographic analysis and by the NSW Inter-Generational Report.
The Planning System was slowed by the focus on Strategic Planning documents. Councils were not supposed to delay rezoning applications while preparing their new Local Environment Plans and their Local Strategic Planning Statements, but they did.
The data released by Minister Stokes today shows the extent of the problem created by the resultant chronic slowdown in approvals prior to COVID-19.
Between 2015-2018 approvals were going well and this, combined with the extension of construction operational hours and the early declaration of construction as an essential service kept this part of the economy working reasonably well. However, through 2019, before COVID-19, approval numbers were dropping off in NSW.
As shown in the marked-up table, there is a lag between approvals and the completion of new homes. The impact of the 2019 slowdown (which got worse in 2020 due to COVID-19) is yet to flow through to household completion numbers – but it will – and this will exacerbate the current rising prices in the Greater Sydney market.
Minister Stokes has sent a clear signal to Councils which are refusing to adopt the GSC 5-year Housing Targets (which are themselves based on the lower 2016 housing forecasts not the more recent May 2020 analysis). Ryde Council and Ku-ring-gai are the worst offenders. They have publicly rejected the GSC targets. If this flows through to other Councils, housing supply will crash, pushing prices up and costing thousands of jobs in the sector.
The fact that prices are rising despite the drop off in overseas migration reflects the fundamental economic reality: demand is greater than supply, so prices are rising.
The numbers quoted in the Minister’s media release will not meet the May 2020 Draft NSW Housing Strategy forecasts for growth.
154,550 new home over the next 5 years equates to only 31,000 new homes each year (well below the GSC 2016 forecast requirement of 36,000 per year and a mile away from the 2020 NSW Housing Strategy target of 50,000 new homes per year.
Tom Forrest is the CEO of the Urban Taskforce.
Subsequent to publication Tom Forrest advised The Hills Shires Council had been exemplars in the area of Urban Planning and Housing Supply.
He sincerely apologised for confusing The Hills Shire Council with Ku-ring-gai in the media statement.
The Council which has been the most opposed to the GSC Housing targets has, of course, been Ku-ring-gai Council.
GSC set a reasonable 5-year target of 5,000 – 5,500 for Ku-ring-gai Council. They passed a resolution to change that to 250 (over 5 years).