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High housing costs are driving young families out of Sydney and into regional New South Wales and other states, a new report from the NSW Productivity Commission found.
The report, titled “What we gain by building more homes in the right places,” indicates a significant population shift among individuals aged 30 to 40 from 2016 to 2021. During this period, Sydney saw a net loss of 70,000 people in this age group, despite 35,000 moving to the city.
“Many young families are leaving Sydney because they can’t afford to buy a home,” said productivity commissioner Peter Achterstraat (pictured). “Or they can only afford one in the outer suburbs with a long commute. Sydney is losing its 30 to 40-year-olds; if we don’t act, we could become known as the city with no grandchildren.”
The report advocates for increased housing density in inner-city areas as a solution to the affordability issue, arguing that this approach would enhance productivity, wages, and environmental sustainability while conserving green spaces.
Achterstraat emphasised the adverse effect of high housing costs, likening them to a regressive tax that disproportionately affects low-income earners.
“Sydney needs hundreds of thousands of new homes over the next two decades,” he said. “Building more in the places people want to live is a key piece to solving the housing jigsaw puzzle.
“45,000 extra dwellings could have been built between 2017 and 2022, with no extra land, by allowing higher buildings. This could have seen prices and rents 5.5% lower — $35 a week for the median apartment or a saving of $1,800 a year for renters.”
Homelessness NSW’s latest data also shows an increase in homelessness across Sydney, further underscoring the urgent need for housing solutions.
The Productivity Commission’s report also discusses the broader benefits of large, compact cities, including improved productivity, educational opportunities, quality public spaces, and enhanced social connectivity.
“New apartments and townhouses in inner suburbs will let young families live near their parents and their children’s grandparents. The social benefits of abundant well-located homes are major,” Achterstraat said. “We know from overseas that density done well provides benefits for households, communities, and the economy.
“I’m confident we can make density work for us. In the last year, we have seen a mature and reasoned discussion from all sectors of the community. The key to progress from here is to listen to the opponents to change but also give due weight to the benefits of density and the views of the broader community.”
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