Sydney experienced its largest housing supply expansion on record in 2018–19, but new research indicates that its impact on housing prices was small relative to other price drivers.

This housing supply boom was primarily large apartment buildings. While Sydney prices were in decline when these buildings were being completed, this new data shows they were sold years before completion ‘off the plan’ when housing price growth was high and remained so. The new information on timing shows that upward price pressures overwhelmed any effects of the supply growth on housing prices. 

Key findings

• Local impact – those areas with more supply growth had modestly lower apartment price growth, suggesting that supply had some impact on prices. 
• No spillover – apartment supply growth did little to lower prices for detached houses. 
• Supply remains important – if supply growth stalls, then housing affordability will worsen, even if it’s unclear how much supply shortages have driven past price growth. 
• Affordability implications – affordability policy which extends to other areas, such as tax and transfer reform, might also influence price growth at a lower cost.