This paper discusses two hypothetical scenarios to the Sydney housing market and total welfare.
The first scenario represents an increase in remote work, for example, as a structural shift in flexible work arrangements post the COVID-19 pandemic. The second scenario represents greater density in the CBD and inner suburbs, for example, as a result of relaxed building restrictions.
These scenarios have been prepared using the model underpinning the peer-reviewed academic paper - Urban Structure and Housing Prices: Some Evidence from Australian Cities . This is a variant of the AlonsoMuth-Mills model, calibrated to represent features of a large city. The model has been calibrated further for this paper to represent Sydney prior to the COVID-19 global pandemic.
The preliminary model outputs will be finalised and presented as part of the next NSW Intergenerational Report (IGR), to be released in 2021, and will support a broader discussion on the importance of effective planning regulations to sustainable growth. It will also provide the opportunity to explore some potential structural shifts resulting from the COVID-19 pandemic and associated government and business responses.