The number of new homes in Sydney that have been approved but not started has climbed to a five-year high as construction bottlenecks aggravate the city’s housing supply crunch.
Despite strong population growth and persistent claims Sydney is in the grip of an accommodation crisis, the backlog of unstarted dwellings jumped by 18 per cent to more than 12,000 in the year to June.
Analysis by KPMG shows nearly 10,000 – or 82 per cent – of the stalled homes are townhouses and apartments.
There is normally a lag between when housing is approved and building begins, but Sydney has an unusually high number in this category as elevated construction costs, labour shortages, higher interest rates and business insolvencies hinder starts.
KPMG urban economist Terry Rawnsley said the high number of apartments approved but not started underscored the financial challenges facing high-density developments in Sydney.
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“The construction sector crunch in NSW has been more acute than any other state, driven largely by construction costs increases and rising interest rates,” he said.
Sydney has much more multi-unit housing than other capitals with 45 per cent of dwellings being townhouses or apartments, compared with about 30 per cent in Melbourne.
“The Sydney market is much more geared towards higher density housing, but that’s the sector where many major developments don’t stack up at the moment,” Rawnsley said. “So we’ve got this pool of zombie projects just waiting.”