Labor threatens Sydney councils as cost to build an apartment hits $1m

> The NSW government will force Sydney councils to make 30-year housing density plans as apartment construction costs surge and changing zoning requirements are found to be an effective way to improve supply and affordability.

> It costs more than $1 million to build a typical mid-rise apartment in Sydney as construction costs keep rising faster than the price of apartments, making projects not feasible for developers, the NSW Productivity and Equality Commission has found.

> The Minns Labor government is forcing councils to allow development, [generating significant backlash from the affluent inner-city councils](https://www.afr.com/property/residential/developers-court-wins-sink-woollahra-s-nimby-fight-20260706-p60d1z) of Mosman and Woollahra, which are being flooded with apartment development applications.

> The commission found that low and mid-rise planning reforms have more than doubled the number of new homes in Sydney that are feasible to build, and it has pushed for further zoning changes.

> "Above all, we need to unlock more homes in the east, north, and inner suburbs of Sydney, where high demand for housing goes hand in hand with high feasibility and lower infrastructure costs,” commissioner Peter Achterstraat said on Wednesday.

> In response, the Minns government aims to remove more barriers to increasing density in sought-after suburbs by forcing councils to identify land feasible for housing development at least 30 years in advance to prevent future supply blockages in popular suburbs.

> If councils fail to provide the strategic plan in two years, the government will step in to ensure housing capacity is delivered through state-led rezonings or other planning reforms.

> “We’ve spent the last three years changing the conversation on housing. Now is not the time to lose our nerve and go back to the planning failures that left a generation priced out of home ownership,” Premier Chris Minns said.

> “Today we’re taking the next step by making long-term housing planning an ongoing responsibility, not a one-off exercise.”

> Woollahra mayor Sarah Dixson said her council had always planned responsibly for future generations.

> “Today’s announcement asks councils to fix a problem that Chris Minns and [Planning Minister] Paul Scully have created themselves,” Dixson said.

> “In typical fashion, the government has again threatened to override local elected representatives, is ignoring community needs and remains silent on funding and delivery for critical infrastructure that new homes and their residents will need.”

> Sydney’s median home value is $1.26 million and home ownership rates in the city have slipped to levels not seen since the 1950s, with dwelling prices about 10 times higher than the median income.

> The cost of building a new apartment in a typical mid-rise unit block in Sydney has risen from $660,000 in 2018 to $1.05 million in 2026, the Centre for International Economics found. The median unit sale price in Sydney is $849,068, according to Domain.

> Experts like Centre for Independent Studies chief economist Peter Tulip [blame NIMBYism and local council zoning restrictions](https://www.afr.com/property/residential/affordability-line-paints-sydney-s-stark-housing-divide-20251119-p5ngsm), among other construction issues, for the lack of supply and affordable housing in the city.

> Mark Bainey, the chief executive of Capio Property Group, said the changes should help increase the supply of zoned land over time and boost the delivery of housing.

> "The state government has done a fantastic job at taking the power away from councils to deliver approvals for developers to create dwellings. So any move where the state government steps in and takes over controls from the council is a welcome one from our perspective as developers,” Bainey said.

> High land costs, labour shortages, materials costs, interest rates, land holding taxes, low productivity and time-consuming development application processes are the other major reasons the cost to build an apartment in Sydney is not stacking up.

> Bainey said there was a shortage of tradies, and more skilled migrants were needed.

> “Particularly in Sydney, we’re in a shortage of qualified trades and labour, and then whatever’s left is going to Brisbane to build infrastructure for the Olympics.”

> Property Council NSW executive director Katie Stevenson said Wednesday’s announcement needed to focus on housing delivery rather than simply planning approvals.

> “The measure of success is not how many homes fit in a planning document, but how many homes can actually be constructed and when,” Stevenson said.

> “We look forward to working with the NSW government on the details of a consistent feasibility framework and the development of practical tools that will help councils understand where and under what conditions new housing can be delivered.”