2024 UDIA NSW ANNUAL STATE CONFERENCE

Swoopland is honored to have been invited to the 2024 UDIA NSW Annual State Conference. During the event, we had the privilege of joining Stephen Halmarick (Chief Economist, Commonwealth Bank of Australia), Monica Gibson (Deputy Secretary, Planning and Infrastructure), Eliza Owen (Head of Residential Research, CoreLogic), and The Hon. Paul Scully MP (Minister for Planning and Public Spaces) in an engaging discussion on market trends, industry challenges, and future development directions.

NSW State Infrastructure & Housing Market Update 2024

New South Wales (NSW) is undergoing significant transformations in its infrastructure and housing sectors.

Infrastructure Investment

The NSW government has committed over $100 billion to infrastructure projects over the next four years, equating to approximately 4.8% of the state’s GDP. This substantial investment aims to rebuild essential services and support the growth of existing communities.

📈 Housing Market Dynamics

Despite this investment, the housing market faces challenges:

• Property Prices: A 7% increase in property prices has been observed this year.
• Development Approvals: Development application (DA) approvals have reached an all-time low.
• Affordability: Sydney remains the world’s second most expensive city, with a housing-to-income ratio of 9.8. On average, 44.8% of income is required to service a new mortgage, and it takes approximately 13 years to save a 20% deposit.

Economic Outlook

Chief Economist at the Commonwealth Bank of Australia (CBA), Stephen Halmarick, notes that:

• Income Tax Cuts: Australians are likely to use additional income from tax cuts to reduce debt rather than increase spending.
• Interest Rates: The Reserve Bank may begin cutting interest rates as early as February, potentially lowering them to 3.1% by the end of 2025.

🏡 Property Demand Trends

Eliza Owen, Head of Residential Research at CoreLogic, highlights that since the pandemic:

• Price Surge: Sydney’s median property prices have surged by 29.8%.
• Demand Shift: There is strong demand for mid-to-lower-priced homes.

📊Development Approval Decline

Between 2012 and July 2024, NSW experienced a significant decline in development approvals:

• Houses: Approvals decreased from 48,000 in 2012 to 22,640 in July 2024.
• Apartments: Approvals dropped from 28,000 to 22,640 over the same period.

This decline indicates a persistent shortfall in housing supply.

🏡Investment Opportunities

For investors not reliant on loans, the current market presents favorable opportunities. Notably, many high-income buyers are targeting lower-priced residential areas, particularly in the southwestern regions near the new airport.

Planning System Reforms

Monica Gibson, Deputy Secretary for Planning and Infrastructure, emphasizes the need for reform in NSW’s planning system. Minister for Planning and Public Spaces, The Hon. Paul Scully MP, acknowledges the government’s ambitious goal of building 377,000 homes in five years. To achieve this, the focus is on:

• Accelerating DA Processes: Streamlining the development application process.
• Financial Support: Establishing a government-backed framework to assist banks in providing staged loans to developers, thereby reducing holding costs.

Current Construction Landscape

Currently, there are 72,000 homes under construction in NSW, predominantly greenfield developments. However, due to the high cost of transport infrastructure, the proportion of greenfield projects is expected to decrease in the coming years. To address housing supply issues, the government plans to increase density in existing urban areas.