Two new, critical ABS data have revealed that housing approvals in NSW remained in the doldrums while the cost of new homes have skyrocketed, according to Tom Forrest, Urban Taskforce CEO.
“The performance of the planning system represents a massive handbrake on the NSW economy and this month’s ABS data shows the extent of the ongoing problem,” Forrest said. “We need at least 6,000 new home approvals a month to keep pace. The monthly data saw us get close, without ever quite getting there, but then the realities of the most confusing, duplicative planning system in Australia kicked in.”
Forrest said the problems began when former Planning Minister Rob Stokes took charge of the planning system in 2019.
“Annual approvals across NSW had been close to or over 70,000 per year for each of the four previous years (2015-2018),” Forrest said. “Then in 2019, they plummeted. Worse, under COVID, the NSW planning system performed worse than Victoria’s, despite their extended lockdowns. We saw some recovery in 2021, but those have disappeared, and we are back in the doldrums.”
With the housing supply now “beyond crisis point,” he said there was a need for root-and-branch reform.
“The words from the top have changed but the practice on the ground has remained the same,” Forrest said, adding that the shortage of planners has actually made things worse. “The NSW planning fixation with obsessive levels of consultation (written into legislation), each round of which feeds the beast of organised ‘community objections,’ is slowing the planning process and holding back the state of NSW. Today’s CPI data shows how much that delay costs.”
Forrest said what’s pushing rents to rise and new home prices to escalate to unaffordable levels were shortages of supply, rising interest rates, and shortages of labour and materials.
“The consequences of having the slowest planning system in the nation, a system that favours the views of local objectors rather than prioritising the need for new homes at all price points and types, combined with rapidly escalating prices, means every planning delay is costing new home buyers big bucks,” Forrest said.
“The monthly CPI came in at 6.9% for the year to October 2022. The most significant contributors to the annual rise were new dwellings (+20.4%), automotive fuel (+11.8%) and fruit and vegetables (+9.4%), according to the ABS.
“The superannuation funds and banks have recently been workshopping with the Commonwealth treasurer whilst pondering the feasibility constraints and high planning risk associated with both build-to-rent and affordable-housing supply.”
Forrest said the ABS data clearly showed that it was the planning system that “presents the greatest constraints and delay, the highest risk and therefore the greatest additional cost and threat to feasible development.”
“The planning system, the Greater Cities Commission, the culture of planners in NSW were all too slow to identify the crisis – indeed, some in 2021 accused the Urban Taskforce for ‘sloganeering,’” Forrest said. “They were slow to respond to COVID. They could see the supply shortage coming. They failed to anticipate rising labour costs associated with the drop-off in immigration. They have been systematically slow to respond to each and every single change to the market they work in. It’s time for a change.”
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