In 2009, Planning New South Wales released information highlighting its concern that dwelling completions were no longer tracking Sydney's exceptionally and increasingly strong rate of population growth.
(1) in the first cycle, there was strong population growth and an equivalent upturn in dwelling completions;
The population of the Sydney region in 2009 was 4.5 million people which was 63% of the State’s population of 7.1 million. By 2036, pointed out Planning NSW, the Sydney region’s population was forecast to increase to 6 million which would increase its dominance of the State’s population to 66 per cent.
Demographics and approvals
Australia-wide construction is on track to hit 180,000 commencements in 2014, the second highest level of commencements ever reported, behind the 187,000 hit in 1984. But as evidence by the above chart, the margins are still too tight for developers to be particularly interested, and the situation balance remains fragile.
Supply issues to continue
Those working in the industry advise me that returns remain too low in the capital city residential development space, and thus the supply response is likely to dry up as soon as we encounter the next property price downturn.
Supply to fail to meet demand?
Reported the HIA yesterday, Australia needs to average 180,000 dwelling commencements per annum over the next 20 years in order to house its increasing population, but over the last 20 years we have averaged only 155,000 per annum:
"This 180,000 is simply not achievable under the current structural barriers to new housing supply".
The HIA cites disproportionately high taxes levied on the housing sector as a principal factor.