Sydney is falling deeper into the housing crisis as the rest of the country experience uplifts in building activity set for a recovery.

A new report by Housing Institute Australia (HIA) revealed that Sydney has no indication of a “near-term rebound” in home construction.

“New home building in the Sydney basin remains exceptionally low, primarily due to exceptionally high land prices and an ongoing excessive impost of housing taxes and infrastructure charges,” said HIA senior economist Matt King.

This compared to Western Australia that saw a 60 per cent uptick in building approvals, Queensland increased 24 per cent and South Australia 16 per cent.

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Western Sydney severely under supplied. Picture: NCA NewsWire / Damian Shaw

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Sydney’s West and South West, a prime destination for first-home buyers and new development, are facing a severe supply crisis, according to Ray White Commercial (RWC) Western Sydney.

In September monthly approvals in NSW dropped to a 14-year low, with only 662 dwellings approved, according to RWC Western Sydney.

There are 5,310 apartments currently under construction in Western Sydney compared to 24,178 new dwellings needed annually through to 2041 to keep up with population growth and housing needs.

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Parramatta in Western Sydney. Picture: NCA NewsWire / Damian Shaw

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RCA Western Sydney noted the South West precinct was experiencing substantial growth, with approvals have surged by over 5,000 dwellings within six months. However, these projects remained several years away, some more than fives years from completion.

Western Sydney’s housing demand is expected to continue at high levels as the region offers a more affordable option for first-time buyers seeking to enter the property market.

Despite affordability challenges, 28,358 first-time buyers entered the NSW market over the past year.

RWC Western Sydney noted that the average loan size in NSW now hovers around $800,000, aligning closely with the state’s stamp duty exemption thresholds, which is helping to facilitate ownership among new buyers.

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Slowdown in new build approvals is stunting Sydney’s market.

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“The appetite for homeownership is evident, but affordability pressures are shifting buyers west,” said Peter Vines, managing director of RWC Western Sydney.

“Western Sydney is only beginning its growth trajectory, but meeting demand with affordable, accessible options is essential.”

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