Sydney’s housing affordability crisis is being exacerbated by a significant slowdown in apartment construction, despite a substantial number of approvals already granted. Approximately 86,000 potential dwellings – three-quarters of the 115,000 apartments approved in Sydney since 2020 – have yet to commence construction, according to new research. This stalled development is raising concerns about the city’s ability to meet housing demand and underscores the impact of rising costs on the property sector.
The data, released Thursday by consultancy Urbis in its 2025 apartment essentials research, highlights a growing disconnect between planning approvals and actual building activity. The Property Council of Australia is calling for increased focus on improving construction feasibility within the upcoming New South Wales (NSW) state budget. Addressing the financial barriers to development is seen as crucial to unlocking these approved projects and boosting housing supply. The situation reflects broader challenges facing the construction industry, including supply chain disruptions and labor shortages, which have driven up building costs.
Construction Costs and Feasibility Concerns
The core issue isn’t a lack of planning permission, but rather the economic viability of proceeding with construction. Rising material costs, coupled with labor shortages and increasing interest rates, are making many projects financially unfeasible for developers. Urbis’ research points to a need for government intervention to address these cost pressures and incentivize development. The Property Council argues that targeted measures in the NSW budget could facilitate bridge the gap between approval and construction, ultimately increasing housing availability.
According to Urbis, the company shapes cities and communities for a better future by bringing together a network of experts. urbis.com.au They recently published reports on topics ranging from precinct development to the impact of the Great Wealth Transfer on property markets. Their function on accelerating smart development in Australia, in partnership with NBN Co, also highlights the importance of infrastructure investment in supporting housing growth. NBN Co and Urbis publish report on Accelerating Smart Development in Australia
NSW Planning System Reforms
The stalled construction comes as NSW undergoes significant reforms to its planning system. A new strategic land use planning framework is set to be implemented, moving towards a three-tiered structure underpinned by statewide land use priorities. Urbis outlines the details of the Draft Sydney Plan, which aims to streamline the planning process and improve alignment between land use, infrastructure, and housing. The framework replaces the existing hierarchy of metropolitan and district plans with a more integrated system, with the first regional plan being the Draft Sydney Plan.
The new plan, expected by Q2 2026, is designed to be dynamic and action-based, evolving over time rather than serving as a fixed 20-year blueprint. This flexibility is intended to allow for a more responsive approach to changing market conditions and demographic shifts. However, the success of the reforms hinges on effective implementation by local councils, according to Urbis.
Geopolitical and Regional Context
Australia’s housing market is a key component of its economic stability, and the challenges in Sydney reflect broader affordability issues across major cities. The situation is being closely watched by policymakers as they seek to balance economic growth with social equity. The NSW government’s response in the upcoming budget will be a critical indicator of its commitment to addressing the housing crisis. The state’s population growth, coupled with limited housing supply, continues to put upward pressure on prices, making homeownership increasingly difficult for many Australians.
Urbis’s registered architects include Kate Paterson (NSW reg 8582, QLD reg 6148, TAS reg 1617, VIC reg VIC00200) and Caroline Stokes (WA reg 1520). Urbis is a limited liability company under Australian law. Their Sydney office is located at Level 8, 123 Pitt Street, Sydney NSW 2000. Urbis Sydney can be contacted at 282339900.
Looking ahead, the effectiveness of the NSW government’s budget measures and the implementation of the new planning framework will be key determinants of whether Sydney can overcome its construction slowdown and address its housing affordability challenges. The coming months will reveal whether these initiatives can unlock the pipeline of approved developments and deliver much-needed housing supply to the market.
What are your thoughts on the challenges facing Sydney’s housing market? Share your comments below and let us realize what solutions you think would be most effective.
