Mark Litwin, Head of Investment Sales (NSW) at Knight Frank, penned a report on Sydney’s housing market fundamentals, which are underpinned by “persistent undersupply”.
Sydney’s most powerful tailwind remains its chronic housing shortage. Population growth—fuelled by the return of overseas migration—has outpaced dwelling completions for much of the past decade.
Detached housing in established suburbs is scarce, greenfield land is constrained by infrastructure and environmental limits, and apartment pipelines have thinned as feasibility pressures mounted.
The result is an imbalance that continues to support pricing across almost every residential submarket.
Rental vacancy hovers near historic lows; median house prices, despite cyclical fluctuations, remain among the highest in the world; and first home buyers are being pushed to urban fringes or smaller footprints in order to secure ownership…
Litwin’s diagnosis is supported by the latest projections from the National Housing Supply and Affordability Council (NSAC), which forecast that New South Wales would miss its agreed housing target by 130,000 over the next five years:
The reality is that excessive net overseas migration is the fundamental driver of New South Wales’ housing shortage.
New South Wales grew by 108,000 people in 2024, driven almost entirely by net overseas migration of 106,700 (NSW lost 28,100 people to other states in 2024, which offset net births).
In the decade to December 2024, NSW’s population ballooned by 983,000, with net overseas migration accounting for 882,000 (88%) of that growth. Migrants having children also drives net births in NSW.
Given that net overseas migration is the overwhelming driver of the state’s housing shortage, the state government should, therefore, request that the federal government cut immigration to sensible, sustainable levels that can be easily digested.
All other policy solutions are side shows.
If the status quo of high migration continues, then the state’s housing crisis will never be resolved, and young prime Sydneysiders will continue to leave the city.
