Housing supply is the word on everyone’s lips in every conversation about housing (un)affordability. While talk about ‘supply bottlenecks’ and blaming the planning system for high housing prices was long the almost exclusive messaging of property development lobbyists, it seems to have worked its way back into government framing of the housing ‘crisis’, and sadly, into policy making. 

Let us be clear. At Shelter NSW, we know and agree that we need to build more homes for the people of NSW. Homes that are well located, close to services and employment, and of high quality. To address the severe affordability issues that continue to worsen, we must dramatically increase the supply of social and truly affordable housing, targeted at the people who need it the most. We call this targeted supply. 

‘General’, or private market housing supply, whether it be traditional ‘build to sell’ dwellings or the emerging ‘build to rent’ and ‘discounted housing’ market, is also an important part of the solution to increase housing diversity, availability, and to a limited extent, affordability. But hoping that private property developers will acquire land, build dwellings, and increase supply far enough for prices to dramatically fall is at best deluded and at worse dishonest.  

Over the last twenty years, record levels of housing supply have done very little to increase affordability. If anything, building approvals and commencement tend to follow house prices increases. Or more precisely, house prices increases that are sufficient to offset construction and associated costs, i.e. house prices that increase developers’ profit margins.  

Annual dwelling completions per capita in Australia have remained relatively stable over the last 25 years. They are also higher than in other OECD countries with much more limited affordability challenges, showing supply side constraints are only a limited factor in runaway prices.

Long term annual dwelling completions per capita and comparable countries show that levels of supply are not associated significantly with runaway prices (or that levels of migration are to blame). Comparable supply levels in the 1980s and 1990s were not associated with unaffordable housing prices. The introduction of the capital gains tax discount in 1999 (as opposed to indexation of the cost base) associated with the introduction of negative gearing – making investment in housing disproportionately attractive compared to other asset classes – provide a much stronger basis for causation of runaway housing prices.

In any case, housing prices have become so unaffordable that even with significant decreases in medium dwelling prices, they would continue to be clearly out of reach for people living on very low and low incomes. 

While increased supply of smaller, well located, high density dwellings might go some way in assisting a limited number of moderate income households – many of which would have eventually purchased their home anyway – to enter home ownership and/or rent a home at a slightly reduced cost (e.g. through high supply of smaller flats close to transport nodes), it cannot be done at any cost.  

Shelter NSW is increasingly concerned that in its laudable goal to address the lack of affordable housing across the state, NSW Government, spurred on by the property development lobby, is adopting a ‘supply-at-all-cost’ approach. But without any controls on rent and purchase price, the supply-side constraints that do exist, and virtually unlimited demand – fuelled by the federal taxation settings mentioned above and the recently announced First Home Buyer Guarantee – there is very little chance that the ‘unleash supply and hope for the best’ approach will result in better housing for people earning ordinary incomes. And the very small proportion of mandated ‘affordable housing’ being delivered is far from being affordable to many – or for long – as dwellings are discounted to 74.9-80% of market rents for 15 years only. 

Managing the fast growth of Greater Sydney, satellite cities and regional centres and delivering high quality, well located, high amenity development that is welcomed by local communities is no easy task. And it requires careful planning and consideration informed by community needs and input.  

Shelter NSW is disappointed by the decision of the Department of Planning, Housing and Infrastructure to reduce community participation requirements to 14 days to ‘support faster assessments of critical housing projects.’ Over the long term, by reducing costly mistakes and ensuring community support, good community participation and engagement saves time and money overall. We are also concerned by the NSW Environmental Planning and Assessment Amendment (Planning System Reforms) Bill 2025 passed last night on 11 November – in spite of the amendments secured thanks to stakeholder concerns – because of: 

• The removal of specialised agencies and other Ministers input to concentrate decision making power in the Development Coordination Authority/Planning Secretary, potentially leading to rushed and poor planning decisions
• The increase in potential for corruption  
• The weakening of social and environmental impact considerations 

The cause (and solutions) to the broken and unfair NSW housing system are well known. Severe housing affordability issues have been largely caused by the 1999 housing taxation settings, lack of government investment in social housing, and the intrinsic inability of a profit motivated private market to cater to the needs of lower income households, not the planning system. Blaming ‘red tape’ and planning ‘bottlenecks’ to justify dysregulation of housing delivery will lead to lower quality planning and development, alienate established communities, and undermine buyer and community confidence without reducing housing stress and homelessness.  

In the over-simplistic debate between NIMBYs and YIMBYs, Shelter NSW urges government, industry and community to strive for good growth that delivers benefits to all. In their current iteration, the planning and building regulation reforms proposed by state and federal government do not include any guarantee that they will deliver the housing supply that we need. We cannot support them.  

Do we want to see more supply? Absolutely. Supply of well planned, high-quality, accessible, energy efficient housing, supported by community, at regulated prices, targeted to those who need it the most. 

To find out more about what our team has been up to, read on.