The Government’s Latest Proposals Regarding Housing Density and the Likely Ramifications for Property Prices

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The announcement by the New South Wales Government this week to amend its housing density policy has sparked significant debate among property buyers, investors, and housing advocates. As a leading property buyers’ agent in Sydney, we at Buyer’s Domain are committed to providing our clients with the most up-to-date and insightful analysis of these changes and their potential impact on the property market. This article will cover the specifics of the government’s latest proposals, compare them with our previous observations, and explore the implications for property prices in Sydney particularly in the Inner City, Eastern Suburbs and Inner West.

Overview of the Government’s Latest Proposals

On 28 May 2024, the Sydney Morning Herald reported that the State Government would be making significant concessions to local councils in its key housing density policy. This policy, initially aimed at increasing the supply of duplexes, terraces, and small apartment buildings within 800 metres of train stations and town centres, will now exclude several types of land from these reforms. The changes are part of a new five-year plan for Sydney and its surrounding areas, which is expected to be released soon.

The government has agreed to reduce the policy’s impact in R1 “general residential” areas, which are common in the City of Sydney, Inner City, Eastern Suburbs and Inner West. This decision was made in response to concerns from councils that allowing four- to six-storey buildings would clash with existing terrace or single-storey homes in these zones. As a result, a quarter of R1 lots in New South Wales, many of which are under heritage protection, will be excluded from the reforms.

According to the new targets, about 40.6% of new homes will be built in the eastern municipalities which is defined as an area stretching from Waverley in the Eastern Suburbs to Ryde and Strathfield further west. Some parts of inner Sydney will have to triple their housing targets over the next 5 years. In contrast, in Western Sydney areas, the share of new housing drops to between 22 and 23%.

Implications for Property Prices

The watering down of the housing density policy is likely to have several implications for property prices in Sydney. Firstly, the exclusion of certain land types from the reforms means that the anticipated increase in housing supply may not materialise to the extent initially expected. This will lead to continued upward pressure on property prices, particularly in areas where demand remains high and supply is constrained.

Housing advocates, such as Sydney YIMBY (Yes In My Backyard), have expressed concerns that these compromises will inevitably lead to fewer homes being built. They argue that the government needs to stand firm on its policies to help essential workers live near their jobs and build more walkable communities. The chair of Sydney YIMBY, Justin Simon, highlighted the disparity between the high-rise buildings in Liverpool and the reluctance to allow six-storey units in our Inner Western suburbs like Glebe or Leichhardt. This inconsistency could perpetuate the affordability crisis in Sydney, where rents have increased by 55 per cent since 2021.

Comparison with Previous Observations

In our previous article dated 22 February 2024, we discussed the potential of higher density housing as a solution to Sydney’s affordability crisis. We argued that increasing housing density could help address the significant property supply shortage in Sydney, thereby easing the upward pressure on property prices. However, we also acknowledged the complexities and challenges associated with implementing such policies, including community resistance and the need for careful planning to ensure that new developments are well-integrated into existing neighbourhoods.

The latest proposals by the government, which include significant concessions to local councils, appear to be a step back from the original vision of higher density housing. While the intention behind these concessions is to preserve the character of certain areas and address community concerns, housing advocates argue that it is crucial to consider the broader implications for housing affordability and supply. The reduced impact of the policy in R1 areas may limit the potential benefits of higher density housing, as fewer new homes will be built in these desirable locations.

Inner West Council’s Response

The Inner West Council has been vocal about its plans to develop its own higher density zoning changes. While specific details of these changes are yet to be finalised, the Council has indicated that it aims to balance the need for increased housing supply with the preservation of the area’s unique character and heritage. This approach aligns with the broader trend of local councils seeking to tailor state-level policies to better suit their specific contexts and community needs.

The likely outcome of the Inner West Council’s higher density zoning changes will depend on several factors, including community feedback, the Council’s ability to navigate the complexities of urban planning, and the state government’s willingness to support local initiatives. If successful, these changes could provide a model for other councils to follow, demonstrating how higher density housing can be implemented in a way that respects local character while addressing the pressing need for more homes.


The New South Wales Government’s latest proposals regarding housing density represent a noticeable shift in policy, with important implications for property prices in Sydney. While the concessions to local councils may help address community concerns and preserve the character of certain areas, they also risk limiting the potential benefits of higher density housing in addressing the city’s affordability crisis.

As property buyers’ agents, we at Buyer’s Domain are committed to helping our clients make informed decisions in a complex and evolving property market. Whether you are an investor seeking the next lucrative opportunity, a young professional looking for a convenient urban abode, or a first home buyer dreaming of your own slice of Sydney, our expertise and deep understanding of the property landscape will ensure that you are well-equipped to achieve your property goals.

We will continue to monitor developments in housing policy and provide our clients with the latest insights and advice. Stay tuned for more updates and analysis on the Sydney property market.

For more information and personalised advice, contact us and discover how our buyers’ agents can help you find the perfect property at the best possible price.

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