The housing supply crisis in Sydney has been exacerbated by a high number of approved but unstarted homes, reaching a five-year high. Despite strong population growth and claims of an accommodation crisis, over 12,000 dwellings remain unstarted as of June. Nearly 82% of these stalled homes are townhouses and apartments, reflecting the financial challenges faced by high-density developments in Sydney. The delays in construction starts are attributed to elevated construction costs, labor shortages, higher interest rates, and business insolvencies.
KPMG’s analysis reveals that the construction sector crunch in New South Wales is more acute than in other states, with rising construction costs and interest rates playing a significant role in hindering building starts. Sydney has a higher proportion of multi-unit housing compared to other Australian capitals, with 45% of dwellings being townhouses or apartments. This makes the city more vulnerable to delays in high-density developments that are currently facing financial challenges. As a result, there is a large pool of ‘zombie projects’ waiting to be started.
The high number of apartments approved but not started in Sydney highlights the financial challenges faced by developers in the current market. The city’s housing market is heavily geared towards higher density housing, which has been struggling to attract investment due to financial constraints. With construction costs on the rise and interest rates increasing, many major developments are struggling to get off the ground. This has led to a backlog of unstarted projects, which further exacerbates the housing supply crunch in Sydney.
The lag between when housing is approved and when construction begins is a common occurrence, but the situation in Sydney is particularly concerning due to the significant number of unstarted homes. The delays in starting construction have been attributed to a combination of factors, including rising construction costs, labor shortages, higher interest rates, and business insolvencies. These challenges have made it difficult for developers to proceed with approved projects, leading to a backlog of unstarted homes that are exacerbating the housing supply crisis in Sydney.
The stalled construction starts in Sydney are a consequence of the financial challenges faced by developers in the current market. The construction sector crunch in New South Wales, driven by cost increases and rising interest rates, has made it difficult for developers to commence building on approved projects. With a large proportion of dwellings in Sydney being high-density housing, the delays in starting construction have had a significant impact on the city’s housing supply. As a result, there is a growing number of unstarted homes that are contributing to the accommodation crisis in Sydney.
In conclusion, the backlog of unstarted homes in Sydney has reached a five-year high, reflecting the financial challenges faced by developers in the current market. The elevated construction costs, labor shortages, higher interest rates, and business insolvencies have hindered construction starts, leading to a significant number of approved but unstarted dwellings. The high proportion of multi-unit housing in Sydney has made the city particularly vulnerable to delays in high-density developments. As a result, there is a pool of ‘zombie projects’ waiting to be started, aggravating the city’s housing supply crunch.
