Councils in Sydney’s eastern suburbs and lower north shore are the city’s most anti-development local government areas, with new research showing aggressive NIMBYism is driving property prices higher amid chronic under-building.
Council areas including Woollahra, Hunters Hill and Mosman had the lowest levels of new dwelling construction in Sydney between 2016 and 2021, according to analysis of census data by the Centre for Independent Studies.
Councils in Sydney’s inner and eastern suburbs are allowing hardly any new construction. Anna Kucera
Between 2016 and 2021, Woollahra council built just 61 homes a year, while Hunters Hill – the smallest council area in Sydney – gained 12 homes annually on average and Mosman built 33 homes a year. The figures equate to tepid 0.2 per cent annual growth in the dwelling stock in each of the three harbourside locales.
Sydney as a whole experienced 2.4 per cent annual growth in the dwelling stock, with Camden, Strathfield and Parramatta local government areas among the most avid builders of new homes.
Amid high demand for new homes across Sydney, report author and former Reserve Bank economist Peter Tulip has blamed limited supply growth on council regulations and an entrenched “Not In My Backyard” (NIMBY) attitude in local communities.
“Whenever you restrict supply, you get high prices, and we see that here,” Dr Tulip said.
Dr Tulip estimates the average apartment in Woollahra sold for $2.5 million last year even though it cost $1.3 million to supply, for a gap of 46 per cent.
The largest gulf was in Randwick, where supply restrictions are driving a 53 per cent gap between the cost of supplying a new apartment ($591,000) and what it sells for ($1.3 million).
“Of course, Randwick also had very restrictive zoning, with a housing growth rate of only 0.4 per cent,” Dr Tulip said.
Apartments in councils with more lax zoning rules like Fairfield sold at prices much closer to what they cost to build.
Dr Tulip said councils in the inner and eastern suburbs were allowing hardly any new construction.
“That restriction of supply, in the face of steadily rising demand, is why housing in those areas is so expensive.”
Most building has taken place in Sydney’s western suburbs, even though CIS found that demand for housing was highest in the city’s affluent inner and eastern suburbs.
New council-level targets would ensure that homes are actually being built in the areas where people want to live.
Dr Tulip estimates that Sydney should be trying to build 43,500 new dwellings each year, compared to the Greater Cities Commission’s (GCC) aim of 38,000 homes.
“[The GCC’s] targets are too low, not explained, not enforced, and they don’t reflect where people prefer to live.”
The Albanese government’s national housing accord aims to build 1 million homes in five years. Dr Tulip estimates the accord equates to annual growth of 35,500 new dwellings in Sydney, which was still not enough.
Labor is also seeking to pass laws establishing its proposed $10 billion housing future fund account, designed to pay for 30,000 new social and affordable housing properties over five years.
The fund will eventually include 4000 properties for women and children facing family and domestic violence, as well as older women at risk of homelessness.
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