The number of new homes completed in Sydney was 25 per cent lower than in Melbourne,which added 43,400 new dwellings in 2023,estimates by consultancy KPMG show.
Terry Rawnsley,an urban economist at KPMG who undertook the analysis,said that although the number of new homes completed in Sydney during 2023 was 3.8 per cent higher than in 2022,it was not enough to meet the city’s needs.
“Rising interest rates are having a substantial impact on the market,cooling demand,and exacerbating existing pressures on the construction industry,” he said. “Elevated costs are also squeezing margins and moderating the pace of new developments.”
Rawnsley estimates more than 10,000 new residences in Sydney had been approved but had not been commenced at the end of September,exacerbating the city’s housing problems. About 85 per cent of the stalled projects were for apartments or townhouses.
Deeper structural factors were also dragging on the city’s housing supply,he said.
“A lack of prime sites was holding back new development in Sydney. The city’s peak in 2018 of 56,500 new dwellings came on the back of key CBD sites and locations like Green Square being developed at a rapid rate,” he said.