The City of Sydney’s Approach to the Supply of Affordable Housing

The issue of the supply of affordable housing has become a pressing concern in many urban areas around the world. In Australia, the City of Sydney has been actively addressing this challenge through various initiatives and policies. The University of Technology Sydney (UTS) has conducted research on the approach taken by the City of Sydney to the supply of affordable housing as part of an ARC Linkage Project (LP150100160) on Local Government and Housing in 21st Century Australia. This paper builds upon earlier publications in this series, including Local Government and Housing in the 21st Century: A Discussion Paper (Beer et al. 2017) and Housing and Local Government in Australia in the 21st Century (Beer, Morris, and Paris 2014). This research aims to provide insights and recommendations for improving the supply of affordable housing in the City of Sydney and beyond.

The need for affordable housing in the City of Sydney is driven by several factors, including population growth, economic development, and changing demographics. The City of Sydney has set ambitious targets for increasing the supply of affordable housing as part of its Sustainable Sydney 2030-2050 vision. This vision includes a goal that 7.5 percent of all private dwellings be affordable housing by 2030. To achieve this goal, the City has developed a comprehensive Local Housing Strategy: Housing for All, which outlines specific actions and initiatives to increase the supply of affordable housing.

As of June 30, 2024, the City of Sydney had 1,447 built affordable housing units in the local area, with an additional 556 dwellings in the development pipeline and 1,385 in the pre-application stage. However, achieving the City’s target of 12,000 affordable dwellings by 2036 will require significant efforts and collaboration among various stakeholders. The current supply of affordable housing is heavily influenced by market conditions, land development patterns, and the ability of community housing providers to leverage contribution funds and attract additional financing.

The City of Sydney has implemented several policy and planning initiatives to increase the supply of affordable housing. One key initiative is the amendment of the Sydney Local Environmental Plan 2012 (Sydney LEP 2012) and the Green Square Town Centre LEPs to include provisions that allow for monetary contributions or the dedication of built dwellings. These provisions aim to provide flexibility to developers while ensuring that affordable housing contributions are made. Additionally, the City has updated the calculation methods for affordable housing contributions to be based on Gross Floor Area (GFA) instead of Total Floor Area (TFA). This change is intended to provide a more accurate and consistent basis for determining contributions.

Despite the efforts made by the City of Sydney, several challenges remain in increasing the supply of affordable housing. One significant challenge is the impact of market conditions on the feasibility and profitability of affordable housing projects. Developers may be hesitant to invest in affordable housing due to concerns about financial returns. Another challenge is the need for coordination among various levels of government and stakeholders to ensure that policies and initiatives are effectively implemented. Future directions for the supply of affordable housing in Sydney may include further policy reforms, increased investment in community housing providers, and the exploration of innovative financing mechanisms.

The research conducted by the University of Technology Sydney provides valuable insights into the approach taken by the City of Sydney to address the supply of affordable housing. Through a combination of policy and planning initiatives, the City has made progress in increasing the availability of affordable housing units. However, ongoing efforts and collaboration among stakeholders will be necessary to achieve the City’s ambitious targets for affordable housing. Continued research and evaluation of these initiatives will be crucial in informing future policies and strategies for the supply of affordable housing in Sydney and other urban areas.