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The Property Council is urging the government to pursue several changes to stem the shortfall.
A recent report from the Property Council of Australia and Savills has drawn on 2023 completion rates and projected that 133,000 new homes will be built under current conditions throughout the 2024–29 Housing Accord, comprising only 41 per cent of Greater Sydney’s overall target.
Commenting on these findings, Property Council NSW executive director Katie Stevenson voiced that an additional 107,400 homes could be delivered across Sydney, the Hunter, Central Coast and Illawarra Shoalhaven, with “government support for targeted, time-limited measures to get the housing pipeline moving”.
“The NSW government can’t control all the costs preventing housing delivery, but one lever they can pull right now is to limit the impact of property taxes and charges stifling development,” she said.
To illustrate this point, Stevenson referred to Savills’ modelling which showcased that temporarily halting new infrastructure charges and expediting planning approvals could “support the delivery of more than 100,000 additional homes by 2029”.
Stevenson also noted that research has indicated that government taxes and charges in some areas are reportedly adding up to as much as “40 per cent to the cost of construction of new homes”.
“The NSW property industry contributes more than any other sector to tax revenue, providing almost half of the NSW government’s $43.2 billion tax and royalty revenue in 2021–22,” she said.
The executive director stated that property taxes and charges have become a growing focus for other states and territories striving to meet housing delivery goals.
Consequently, she called on the NSW government to follow the example set by Queensland and the ACT, and assess how the state’s property taxation policies may be impacting housing supply.
“We’re calling for a suspension of new infrastructure taxes and charges during the Housing Accord period, and for government to invest upfront in the infrastructure needed to support new homes,” she said.
Stevenson emphasised that delivering more housing without delay is vitally important, stating that completed projects will enable the government to “recoup its investment in the long term”.
“Housing projects that get built generate stamp duty, land tax and payroll tax. Housing projects that remain on a spreadsheet don’t generate any value at all,” Stevenson said.
“It’s already a tough environment for construction – new taxes and charges make it even more difficult for companies to secure financing to get vital housing projects moving.”
The report further detailed that suspending two charges which came into effect in the last 12 months – Water Development Servicing Plans (DSPs) and the Housing and Productivity Contribution (HPC) – and streamlining approval processes, could enable NSW to get closer to its 2029 Housing Accord target.
Stevenson stressed that “suspending these charges just for the next five years” could mean the “difference between more than 100,000 new homes getting built – or not”.
Another report produced by the Property Council and Savills delved into the construction challenges across Greater Sydney, with a focus on the Lower Hunter, Greater Newcastle and Central Coast regions.
Reflecting on this research, Savills national director of property consultancy, Stephanie Ballango, said the findings raised concerns about the NSW government’s current focus on “new apartment developments in existing neighbourhoods”.
“Our analysis shows that even with the suspension of the DSP and HPC taxes, infill apartment development remains financially unviable under current conditions and into the immediate future,” Ballango said.
“This issue is particularly acute for smaller operators who dominate the infill development space, and a major concern given government’s focus on ‘building up, not out.’”
Stevenson called for “urgent action” to address the financial obstacles hindering housing delivery and called for the government to leverage consolidated funding to “deliver new sewers, roads, parks and other infrastructure during the period of the Housing Accord”.
The executive director stated that these measures would then “make housing delivery more viable by removing these taxes from project costs”.
“Suspending taxes during the Housing Accord period and putting more urgency behind speeding up planning approvals will give us a fighting chance to meet our housing goals,” she concluded.
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