Urban populations are forecast to increase in the coming decades. Population growth is a major underlying factor for the demand for housing and without a new supply of dwellings, it pushes up the prices for both renting and purchasing dwellings. The resultant fall in affordability is a problem that is further compounded in many large cities by the change in living preferences that has resulted in a fall in household occupancy rates, particularly in the western world.

Affordability is further eroded in many of the urban cities from the supply side of the equation, as new supply is needed to house the growth of population, which results in urban sprawl, which in turn is putting pressure to upgrade and extend existing infrastructure or provide new infrastructure. As the new supply is often in outlying areas of the city, the requirement for new infrastructure is more the norm and together with new environmental compliance costs and elevated quality expectations, it impacts the cost of new supply.

In order to analyze the likely trends in housing affordability, Sydney is explored as a case study. It is expected to grow significantly and housing this growth is putting pressure on both urban redevelopment and fringe settlement. Both of these bring specific challenges that shed light on the question of long-term trends in affordability. This paper will analyze several policy directions that could be considered in order to address these adverse trends in housing affordability.