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What's choking Sydney's supply?

What's choking Sydney's supply?

Earlier last week the R&W Parramatta office sold two fibro cottages in Merrylands for a million apiece. That these modest homes fetched seven figure sums in an entry level suburb and barely raised an eyebrow says everything about housing affordability in Sydney. Nothing surprises anymore.

It’s an issue that has transfixed media, the real estate industry, government and the wider population for some time now but the collective hand wringing has done little to address the problem.

There is broad agreement that increasing supply will allow the market to make its' own correction. Yet we’ve seen the NSW Government accelerate the release of land for new subdivisions with no discernible tapering off in price.

Granted there are bigger systemic problems around housing affordability but it’s reasonable to begin asking why an increase in supply is not dampening prices as it should.

Our agents in the western suburbs of Sydney have for some time been witness to the problem that is choking supply. Plenty of people are putting deposits on blocks of land but the bureaucracy and process around registration and approvals is so slow and cumbersome that these sales are not completing and nothing and nobody is moving.

In the normal course of events these new land buyers would build and sell their existing homes, creating a surge of second-hand listings, completing the anticipated recycling of property and keeping a lid on price escalation.

It’s an issue that everybody seems to know about but few are prepared to discuss openly. Most developers are reluctant to make a noise while they are desperate to get approvals out of council.

Stockland CEO and Managing Director Mark Steinert bravely laid it out at the UDIA NSW State Conference this week when he identified the thousands of lots in western Sydney that can’t be registered because “local government hasn’t enough planners to stamp the forms”.

NSW Shadow Infrastructure Minister Michael Daley put some numbers to the problem – 70,000 dwelling unit approvals last year but only 27,200 completions. That is a massive shortfall. And while he pointed the finger of blame at the council planning system he also singled out the utilities, Sydney Water and RMS, for their role in causing delays.

Finger pointing is never a useful exercise unless it leads to positive action. It’s worthwhile remembering that in some instances the concentration of new development is in local government areas where the council simply hasn’t the capacity to handle the flood of planning applications at the speed everybody would like it.

It’s an issue that has existed under both LNP and Labor administrations but it would be helpful if some of those buzz words favoured by business and politicians were put into action. Agility, flexibility and collaboration would go a long way to addressing the bottleneck that is stunting the best efforts of the government to fix a long-term problem.

 

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