There are nearly 900,000ha of land, 2.7 million people living there and huge demand, but making residential developments stack up in Western Sydney remains a problem. In the region, 58 apartments need to be built every day—or 21,478 a year—until 2041 to keep up with demand, according to Ray White Commercial Western Sydney’s Residential Development Report. However, there are several key elements missing from the far Western Sydney development puzzle, a region with the third largest economy in Australia. This is despite the Federal Budget announcement of $2 billion for infrastructure to connect the Nancy-Bird Walton Airport and Aerotropolis with the Sydney CBD. The plan includes new roads, upgrades, bus lines, a final business case for a freight line, and scoping for other rail projects. But, Ray White Commercial Western Sydney Peter Vines says, this may not be enough. At the current rate of development, Western Sydney is on track for a 200,000 home shortfall by 2041, bearing the brunt of the state’s housing crisis. “For NSW at the moment we are only delivering 17,000 [a year] and that’s for the whole of NSW,” Vines says.  “It is a more challenging area than the rest of Sydney. “It is typically a lower price point, so with construction costs where they are it is very difficult to make developments stack up. ▲ The Nepean River at Penrith. More than 70 per cent of migrants to Australia live in Western Sydney in their first five years, but prices and rent are only going up. “The value in the land needs to come off further for it to make sense because there’s a limit to what people can afford to pay for something and there’s a cost to build. “So the only thing that can give in that stack, unless there’s a boom in the housing market, is the land.” Vines says while the zoning is right, builders have moved to infrastructure projects and builder-developers in other parts of Sydney.  “It limits the amount of groups who can and will play in the space,” Vines says.  “Even if you gave the land to somebody, it would be difficult to make money. “Whereas, in the Eastern Suburbs or Lower North Shore you’ve got dozens of groups playing in a small area because it’s smaller projects, and the margins are higher.” Vines says that there is no incentive for investors to get into the market, and that tax concessions for new apartments could help. “It’s the perfect storm. The moment you start jacking up interest rates nobody does anything, which is what is designed to happen, but as a result it stops investors buying,” Vines says. “The majority of people unfortunately, given the pricing, can’t afford to buy. Part of it has to be helping people buy and the other part will be helping investors, so rents don’t keep running like they have.” A report by the Property Council of Australia and Savills, ‘ Release the Pressure ’ , added to the concern with it finding two new property taxes recently imposed by the NSW Government will render major housing developments in the west financially unviable. The report says a typical 250-unit apartment development and a 115-lot greenfield development would no longer be financially feasible in 2024 and significantly less feasible in 2026 under planned increases to Sydney Water DSP and HPC charges. The report expects that by 2026, 15 different taxes and charges will make up more than a third of the cost of a new home in the Western Parkland City.  In the Central River City, taxes and charges will make up more than a quarter, 26.5 per cent, of the cost of every home. The missing link However, there is space for 30 more transit-oriented development precincts in that area to follow the NSW Government’s mass rezoning around eight stations already. This is the suggestion from the Western Sydney Regional Organisation of Councils to the Legislative Council’s inquiry into current and future public transport needs in Western Sydney. Organisation president Barry Calvert says there is an inequitable distribution of public transport services between the east and west of Sydney. “Western Sydney councils are very keen to work with the federal and NSW Governments to build greater connectivity around the planned section of the Metro Western Sydney Airport line north to Tallawong and south to Macarthur,” Calvert said. “That section of line has the capacity to have stations at 2km spacings, resulting in 30 new stations supporting communities that could actually accommodate the growth of Western Sydney, a north-south rail link that links Tallawong to St Marys, and an extension to Leppington from Western Sydney international Airport.”  Connecting airports to cities via train is nothing new, it just takes a long time. Melbourne announced its $1-billion plan in 2022 to be complete by 2029.  ▲ A render of the first stage of the Western Sydney Airport Development project. Sydney is still in the scoping stage for parts of the line but in the meantime there will be a lot of roads and buses. The $2-billion round of Federal Budget funding is expected to unlock development and new places for people to work and live including zoning to attract 250,000 people .  NSW transport minister Jo Haylen says this is a big win for passengers right across Western Sydney.  At the time of the announcement, Haylin said the Federal Government had “stepped up to help deliver the future bus services that will connect passengers in the west to the new airport when it opens in 2026”. The announcement included $20 million for the final business case for stage one of the Western Sydney Freight Line and $20 million to scope and plan the Macarthur region rail connection.  Urban Taskforce Australia chief executive Tom Forrest says the announcement is recognition that the new airport, by itself, is not enough to build a city.  “It will now be up to the NSW Government to get cracking and hit the milestones that will unlock these Commonwealth funds as soon as possible,” Forrest says.  “All eyes will now be on the NSW Budget in June to see progress on these projects and the release of this new Federal funding.” You are currently experiencing The Urban Developer  Plus (TUD+), our premium membership for property professionals.  Click here to learn more.
