100,000 Approved Homes: So Why Aren't They Being Built?

For years, the story on Australia's housing crisis has been simple: cut planning red tape, approve more developments, and affordability will follow. Veronica Morgan and Chris Bates put that story to Tim Sneesby, an urban economist and town planner who has spent almost twenty years working both sides of the table, in urban economics consultancy and inside local government strategic planning. More than 100,000 approved dwellings are sitting unbuilt in New South Wales right now, and Sneesby argues that fact alone should be enough to make people question the narrative.

Chris opened by asking about the wave of changes to the New South Wales planning system, and whether zoning really is the problem it's been made out to be.

Tim: Yeah, it's a great question, Chris, and something I've certainly thought about since I started working as a planner almost twenty years ago. Even back then there were calls to cut zoning red tape, cut development assessment timeframes, fast track approvals. At that time those calls were coming almost exclusively from the development lobby and from treasury departments. Fast-forward to now and that's become the dominant narrative: that if we simply cut zoning red tape, up-zone everywhere all at once, improve assessment timeframes, then we'll have abundant cheap housing for everyone. One of the things I said in a recent article was that for every complex problem there is a simple answer, and it is always wrong.

Veronica pressed on why the supply-side story has taken hold so completely, when the evidence tells a messier story.

Veronica: The supply side argument is intuitive, isn't it? Of course, just build more. And politicians love it because it sounds positive on both sides of the political spectrum. But I think if we go back to this belief that councils have been blocking approvals: you've reported that 95% of development applications in New South Wales get approved, and Sydney just came through its biggest ever construction boom under the same planning system now being blamed for the crisis. So how did the narrative get so far ahead of the evidence, and who's been letting it run?

Tim: Certainly over the last couple of decades, 95% of DAs are approved in New South Wales. Sydney's just had its largest housing boom under this planning system we're dismantling. Australia is a world leader in housing supply: for the last twenty-five years, housing supply has outpaced population growth. And this relates to the 100,000 approved but unbuilt homes too: if you look at the last two years in Sydney, less than half of DAs for multi-residential development have actually gone on to be built. All of those facts are clear as day, but we're going through this approach anyway, because the whole supply-side story is a really compelling argument, like bananas when a cyclone caused a shortage and the price went up. Most people have a basic understanding of that. But there isn't a huge display of what the empirical evidence actually shows, and where governments do point to evidence, it tends to be cherry-picked examples like Auckland, without engaging with why that doesn't necessarily translate to somewhere like Sydney.

The competing explanation Sneesby put forward is that housing, like other asset classes, has become financialised, driven by macroeconomic conditions rather than planning settings.

Tim: One of the slides I like to show when I'm lecturing is two identical charts from the last forty years: one is the price of housing in Sydney, one is the price of farmland in Australia. They're identical charts. And the question I ask is: how has the New South Wales planning system caused farmland to be so expensive? When you look at this issue across different asset classes at a global scale, you find a global phenomenon of the financialisation of assets, and there are many, many factors that have driven that.

Is NIMBYism really blocking housing?

Chris asked whether community opposition to development, NIMBYism, might explain some of the gap between approvals and construction, particularly in pockets of Sydney where little had been built for years.

Tim: NIMBYism is real. We all see it, we're all frustrated by it. But when you've worked as a planner as long as I have and looked at the research, NIMBYism doesn't reduce housing supply at an aggregate scale in any meaningful way. We have legislative frameworks that guide development assessment decisions from the outset. You might get a hundred submissions on a DA, but if that DA is compliant and meets the objectives, those hundred submissions won't make a difference. If a council refuses a development application, there's an appeal process, and there are checks and balances within our democratic system. I will say this: cases like the Lower North Shore do indicate there are places in Sydney with genuinely unmet demand. But to suggest little old Mosman is going to solve our housing crisis is completely disingenuous. Places like Waverley and Woollahra in the eastern suburbs get painted as wealthy enclaves of large housing estates, but Waverley is the second-densest LGA in all of Australia, and two-thirds of its stock is apartments.

A better alternative to blanket rezoning

Chris asked whether there was a middle ground between blanket, state-led rezoning and the old council-led approach.

Tim: The better approach would have been to go through a proper master planning process, where you get buy-in and create place-based outcomes: better centres, better neighbourhoods, calibrated design for each area. You can get an outcome that delivers just as much housing, if not more, than an up-zone-everywhere-at-once approach. That's the historical approach to strategic planning in Greater Sydney, and it's why we had a record housing boom less than ten years ago under that older system. The benefit of that system is that you can capture value to fund infrastructure and to deliver affordable housing. Under the current approach, those opportunities are very limited.

The affordable housing catch

Veronica pushed for detail on how the state's affordable-housing bonus scheme compares to what councils have historically negotiated through their own planning processes.

Tim: Affordable housing as a concept is fairly new in New South Wales. Only in the last ten years or so has the state government said, actually, we'll capture some of the uplift and fund affordable housing with it, and various councils have set their own target rates, mine is 10%. When councils secure it, it's in perpetuity: it's dedicated, given to council or to a community housing provider, and it's genuinely affordable, often around 30% of income. The state government's bonus scheme, by contrast, only requires affordable housing for fifteen years, it's owned by the developer, and (this is the real sting) the discount is calculated off the market rent for that same new development, not the suburb's actual median rent. So a 20% discount off a $2,000-a-week apartment can still land well above what a genuinely comparable two-bedroom in that suburb rents for. That's an implementation issue the state government needs to fix.

The truth about infill vs greenfield

Sneesby also took aim at the idea that a shortage of inner-city housing has forced buyers out to Sydney's greenfield fringe.

Tim: Housing works in sub-markets within sub-markets: someone who wants a greenfield house in Kellyville isn't a lost buyer for an apartment in Woollahra. For probably the last fifteen years, the vast majority of new housing stock has been apartment stock, infill stock. There was a blip around 2020 because of the home builder bonus, which shifted demand toward greenfield, but we're just reverting to the long-term split now, which is around 85% infill and 15% greenfield.

Why interest rates matter more than supply

The conversation turned to the Reserve Bank's own modelling on what actually moves prices.

Veronica: Can we get to some of the numbers? You've looked at the Reserve Bank's own modelling, finding a 1% drop in interest rates pushes prices up by 30%, while doubling housing supply moves them down by around 5% over many years. If the demand-side levers are that dominant, why has the entire policy conversation been around supply?

Tim: In terms of the RBA's own work, the biggest driver of housing prices is by far and away interest rates. That's also been the main driver of the financialisation of asset classes across the globe. A record-low interest rate environment has had people chasing lower and lower yields. In Australia there are added layers, like the tax settings around investing in housing, plus the cultural weight of the great Australian dream. But it's much more difficult for governments to pull demand-side levers than to do planning reform theatre, which costs governments nothing.

Veronica noted the research predates the recent run of rate rises alongside continued price growth, and Sneesby agreed that's a genuine open question for future modelling, possibly a lag effect, possibly what he called a dead cat bounce.

What really drives housing demand

Tim: If we want to talk about our construction labour force: we have one of the largest construction labour forces as a percentage of our overall workforce in the OECD. It's not as if we've got a small construction labour force we can just ramp up. In the absence of increased skilled migration for construction, it's a very slow process to build up capacity. And no one talks about the fact that a major infrastructure pipeline crowds out that same construction workforce.

The hidden labour crisis behind housing

This is where Sneesby pointed to what he called the real elephant in the room.

Tim: If you look back fifty years, very little of the construction workforce was spent on renovations. Now you drive around any inner suburb and every fifth house is getting renovated. The percentage of our construction labour force absorbed by home renovations is genuinely massive.

Veronica raised a conversation with someone in the construction industry who expects labour costs, not materials, to be the bigger driver of future building costs, a read Sneesby, whose own family are volume home builders, agreed with.

Why equity keeps driving property prices

Chris pointed out how much of the market now runs on accumulated wealth rather than new borrowing.

Chris: A third of homes are owned by people without mortgages, and cash buyers are driving a lot of transactions that don't need finance, particularly the further up the wealth spectrum you go. You can see $12.6 trillion of property values against $2.5 trillion of mortgages, and there's $10 trillion of equity sitting in there.

Tim added that even in his own research, more than half of home purchases in Sydney in recent years were completed without finance at all: transactions happening in isolation from interest rate movements altogether.

Why developers can't build everything

Chris raised a gap in the market: family-sized apartments in well-located areas that families who've outgrown one- and two-bedroom stock simply can't find.

Tim: The point about what housing actually gets built relates to effective demand, not underlying demand: what's going to make money, not what the population needs. In the 2018 boom, the money was in one- and two-bedroom investor-grade stock, so that's largely what got built. Now, in the area I work in, it's three-bedroom apartments that are going up, but the buyers are downsizers selling $8 million houses for $3 to 4 million apartments, not young families. Out in Western Sydney it's the opposite: councils can't get three-bedroom apartments built because the numbers don't stack up there, so it's investor-grade stock again.

Why approved projects never get built

Sneesby explained why so many approved developments stall before a shovel goes in the ground.

Tim: Post-COVID we saw detached house prices and apartment prices diverge, having previously tracked each other closely. That's created a major feasibility problem, on top of the construction cost blowout. It's now much harder to assemble sites for redevelopment, because your raw land input costs have gone up so much more than your end product has. In an eastern suburbs example, ten years ago you might have bought a $1.5 million house and sold apartments as your end product. Now you're buying a $4–5 million house and selling $1.2–1.5 million apartments. That's killed feasibility on a lot of sites, and outside select pockets like the northern eastern suburbs and the Lower North Shore, most of Sydney isn't feasible for new apartment development at all. We saw exactly that at the end of the 2018 boom, when entire suburbs like Parramatta were blacklisted by the banks for both developers and buyers, and developers had to go to the shadow banking sector at very high interest rates.

Is Australia's housing crisis misdiagnosed?

Tim: The greatest irony, speaking to developer contacts over the years, is that so many of them are saying, post-COVID, with construction costs up so much, that they need house prices to go up if they want to build more housing supply. Meanwhile, government and media are saying that if we build more housing, prices will come down. They find that quite funny, and it is, except it's also affecting all of our lives. As soon as prices start to come down, there's an automatic brake the market puts on, because unlike bananas, housing supply is fundamentally based on financing.

Veronica closed the point by noting that treating housing like a commodity such as bananas is, at best, naive: a line that captured the episode's throughline, that no single lever, whether it's zoning, interest rates, negative gearing, or population growth, explains the housing crisis on its own.

When planning reform creates more uncertainty

The episode closed, as it always does, with a "property dumbo," a cautionary story with a lesson in it.

Tim: About a month ago there were announcements all over the media about light rail being extended from Kingsford in the eastern suburbs down to La Perouse, and everyone in my WhatsApp groups and Facebook groups was talking about it. It only took clicking through to the source to see the media was just regurgitating a press release from a light rail operator and builder: private interests feathering their own nest, getting mistaken for policy. It's a good microcosm for everything we've talked about today.

Chris admitted he'd fallen for the same story after spotting a flyer in his sister's letterbox, and reflected that the uncertainty created by rushed, top-down rezoning, with residents unsure what might be built around them, on what timeline, for years to come, has made the transition harder for everyone involved, developers, councillors and buyers alike.

Veronica: There's a real lack of certainty that's crept in: you spend $4 million on a house and end up with a block of units at the back and side of you. That uncertainty, on top of everything else, is just one of the many, many levers that go into driving property markets. It's lazy thinking to put the housing crisis down to any one of them: red tape, the budget, negative gearing, capital gains tax, population growth. If you've got one answer, it's going to be wrong.

For anyone weighing up how a shifting rezoning and interest rate environment affects their own next move, particularly if property forms part of a broader wealth strategy, talking to an investment property mortgage broker before acting on headlines rather than fundamentals is generally the safer starting point. As this episode makes clear, the settings that actually move prices, like interest rates, taxation and finance conditions, tend to matter more than the planning debate getting most of the airtime, which is exactly the kind of property investment mortgage conversation worth having before committing capital either way.

Sources referenced: The Elephant in the Room Property Podcast, Episode 445, "100,000 Approved Homes: So Why Aren't They Being Built?," published July 13, 2026, hosted by Veronica Morgan (Good Deeds Property Buyers) and Chris Bates (Alcove), featuring Tim Sneesby (Manager of Town Planning, Sydney council; Honorary Senior Lecturer, University of Sydney).

Want more? You can find Episode 446 of The Elephant in the Room Property Podcast here.

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