Recent revisions to Sydney’s population projections made by the Department of Planning and Environment indicate that the population of the Greater Sydney metropolitan area could reach 5.9 million by 2031, reflecting an annualised growth rate of 1.6% between 2011 and 2031.

The forecast increase in population means that Sydney faces a significant challenge in meeting its future housing requirements, particularly given that the market has been undersupplied for a sustained period of time.

The Department of Planning and Environment forecast that an additional 664,000 homes will be required by 2031 and have established housing targets in the Draft Metropolitan Strategy for each of the six Sydney sub regions.

A likely consequence given the level of projected housing need is further construction of higher density housing.

Compared with many other cities around the world, Sydney has, in fact, a relatively low housing density. However, over the past decade, there appears to have been a structural change in buyer preferences, particularly amongst younger cohorts. Many are turning their back on the aspirations of previous generations who dreamt of a life in the suburbs, in favour of living in areas closer to, or with better transport links to, Sydney CBD. The higher land prices associated with these locations, of course, necessitate higher housing densities. However, buyers appear willing to trade space for convenience. This trend is evident in building approvals data for Sydney. 68% of approvals in the 2013/14 financial year related to attached dwellings.

However, higher residential densities are unlikely to be confined solely to inner city locations. The eight Urban Activation Precincts announced by the State Government in March 2013 aim to deliver higher density housing in highly accessible suburbs. These include Macquarie Park, Mascot and Randwick, allowing housing supply to increase in areas with close proximity to infrastructure, transport, services and jobs.

Higher residential densities are also proposed for suitable development sites located both within and on the periphery of the CBDs of regional cities such as Parramatta, Liverpool and Penrith.

A more recent trend is the inclusion of higher density housing in master plan communities. These are often located in outer Sydney in areas dominated by detached dwellings. Whilst apartments make up a relatively small proportion of the proposed housing in these schemes, they are seen as a way of both attracting investors and addressing the affordability issue facing many owner occupiers owing to their lower price points.

Indeed, in view of the challenges surrounding both housing supply and affordability in Sydney, it would appear that more and more of us will be living in higher density housing in the future. The majority will be located close to public transport, infrastructure and employment hubs.

Building at higher densities will not automatically solve all of Sydney’s housing problems, as to do so requires an integrated approach at all levels of government. However, it is clear that it will make an important contribution to meeting the housing targets set out by the Draft Metropolitan Strategy.

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