Sydney cannot keep growing without sufficient of new housing. According to the Australian Bureau of Statistics, the Australian population grew during the first quarter of 2008 by 102,000. However, according to the Housing Industry Association, the number of new homes being built in NSW has dropped by 37 per cent since 2002-2003. There is insufficient housing to meet the populations growing demand.

According to many sources, including RP Data, Australia is experiencing a chronic shortage of housing, it’s estimated that the shortfall of new dwellings being built is around 30,000 each year. Australia’s infrastructure development should be ‘out doing’ the population growth, not lagging behind.

Developers are not doing what they do best, and the supply and demand imbalance for property is forecast to become even more of a problem moving forward.

Growth in land costs throughout many parts of Australia is outpacing the growth in housing prices, and this is becoming a challenge for new home developers. According to BIS Shrapnel report series author Mr Angie Zigomanis, “After the greenfield land cost, development costs and government charges, developers cannot make an effective margin at current values”.  BIS Shrapnel expects developers will hold back on development until demand improves and lot prices rise sufficiently to make development viable.

With high land prices and rising development costs there’s little light at the end of the tunnel. Developers are unable to profitably build new homes that the current average homebuyer would be able to afford.

So how is Sydney going to accommodate its growing population? According to ‘The Metropolitan Strategy – Sydney’s blueprint for development’ – the city would need an extra 876,640 dwellings by 2031. Australia needs to be building more homes yet developers are not seeing any benefits in putting houses on land at a price which buyers just cannot afford!