Housing is key to economic security and quality of life. By 2060-61, New South Wales will need an additional 1.7 million homes, equivalent to one new home for every two existing homes. This means we’ll need to add an average of 42,000 new homes every year, which will be challenging. Homeowners typically enjoy much higher living standards in retirement, but homeownership rates have been declining as deposits become more expensive. Building enough housing, and higher interest rates compared with today’s historic lows would moderate long-run housing price growth.
Net additions to NSW housing stock: Actual and projected requirement
Housing supply needs to increase every year to keep up with population growth and changes in the number of people per household. Over the next 40 years, New South Wales will need to add 42,000 new homes every year.
Source: ABS Census, ABS 8752.0 and NSW Treasury.
Years to save for a deposit
Saving for a deposit is a key barrier to home ownership and the time it takes to save has increased significantly over the past few decades. If we build enough houses and interest rates increase from record lows, the deposit barrier could ease slightly over the coming decades.
Source: CoreLogic, RBA, ABS 6523.0 and NSW Treasury.
NSW will need
NSW needs an average of
additional homes every year over the next 40 years
Number of people per household:
(down from 2.5 today)
Insights and opportunities
- NSW is projected to require 1.7 million new homes by 2060-61. That’s equivalent to one new home for every two existing homes.
- NSW will need to add an average of 42,000 new homes every year, which will be a significant challenge.
- The average number of people per household is projected to decline from 2.5 today to 2.3 in 2060-61.
- Housing affordability is a key challenge, with the time taken to save for a deposit having increased from 6.6 years in 1996 to 11.5 years in 2020.
- Homeownership is key to building a secure and independent retirement. Household disposable incomes for homeowner retirees are more than double those of non-homeowners.
- Property tax reform would lower the deposit barrier and make it easier to move home. It would increase the homeownership rate and support higher productivity.
Last updated: 08/06/2021