Sydney is racing to build more homes as housing prices soar. But where is the land?

SYDNEY – Australia’s most populous and least affordable city Sydney has a problem: It desperately needs more housing but is struggling to find a large parcel of empty land on which to build it.

The city of 5.6 million people has a growing population and spiralling property and rental prices that have made it one of the world’s least affordable cities. 

But the authorities want to end the urban expansion into undeveloped or greenfield sites in the outer fringes, which has resulted in remote suburbs that are as far as 80km from the city centre and that often lack adequate services.

Instead, local and state governments have been looking for large, open or convertible spaces within existing urban areas.

Like Singapore, which will develop new housing precincts at Bukit Timah Turf City and the former Keppel Golf Course, Sydney planners have been on the lookout for available parcels that could be redeveloped. Turf City is set to have 15,000 to 20,000 public and private homes over the next 20 to 30 years, while the Keppel site will have about 9,000 homes.

But the authorities in Sydney, capital of New South Wales state, are struggling to find similar sites.

The New South Wales government proposed converting a racecourse, called Rosehill Gardens, into a “mini-city” of 25,000 new homes and a train station. The 140-year-old racecourse spans 57ha of prime real estate, about 25km west of the city centre.

The government offered A$5 billion (S$4.2 billion) – about 128 times the value of the land – to buy the racecourse from the Australian Turf Club, which owns and operates it. But the club’s members voted against the proposal on May 27 in a 56 to 44 per cent ballot, due to a sentimental attachment to the racecourse and concerns that its loss would damage the city’s racing industry.

The government is now searching for a Plan B to try to meet its target of building 75,000 new homes a year, to keep up with population growth and improve affordability. Various proposals have emerged, including the site of the 2000 Olympics, an inner city port and a dilapidated former main road.

NSW Premier Chris Minns on June 10 warned that Sydney was losing younger residents who could not afford to live in the city.

“Housing persistently is our biggest challenge, not just in the economy but in terms of intergenerational fairness and equity and giving young people an opportunity,” he said in a speech to business leaders.

“A city without young people is a city without a future, and the leading reason for that is we’re not building enough houses.”

Sydney has the most “impossibly unaffordable” housing in the world after Hong Kong, according to the most recent Demographia International Housing Affordability report in 2024. The average prices for houses and apartments in Sydney are A$1.5 million and A$860,000, respectively, while the average rental is A$775 a week. 

Associate Professor Laurence Troy, an expert on urban renewal from Sydney University, told The Straits Times that the government should compulsorily acquire the racecourse, which was one of the few remaining brownfield – underused or abandoned – sites that could be converted into large-scale housing.

“Clearly we still need to build more housing because the population is still growing,” he said. “We are basically running out of brownfield sites. If Rosehill is of such strategic importance, why is the government letting the land holders hold them hostage?”

But Mr Minns has so far ruled out compulsorily acquiring the racecourse.

One option could be to expand housing at the site of the Sydney Olympics, a 430ha plot about 19km west of the city centre. The site currently has a mix of sports and entertainment venues, parklands, commercial developments and housing.

The government is planning to build 13,000 homes on the site by 2050, but is set to fall far short of its target of 10,700 homes by 2030. The lack of development has been blamed on delays due to toxic waste contamination at the site, which was formerly an industrial area, as well as insufficient transport options.

Another option could be to shut the last operating port in Sydney harbour at Glebe Island near the city centre and build homes on the site. But business groups say the port is crucial for the transport of building materials, and its closure could add to construction costs.

Another proposal is to develop housing along Parramatta Road, a main road that is being superseded by new underground roadways. But experts say an impediment will be pollution from the road traffic, which could pose health problems.

Professor Nicole Gurran, an urban planning expert from Sydney University, said that adding to the housing supply in the city did not necessarily depend on finding a “sugar hit” such as a racecourse.

“We have abundant zoned sites that are appropriate for housing development,” she said.

However, the authorities largely left it to market forces to instigate construction. In recent years, she said, high interest rates and construction costs have discouraged developers.

“While prices are stagnant and people are struggling to get loans, and with affordability so poor and banks so cautious to lend, it is hard to get projects off the ground,” she said.

Prof Troy also said the government should focus on the type of housing it wants to build, rather than depending on the creation of a quick-fix “mini-city”.

Instead of building high-rise towers, which are less popular with families and property buyers, or large houses in greenfield sites, Sydney should build more medium-density housing – such as terraces and low-rise apartments – which are popular and can increase the city’s overall housing density.

 “We need to look at the spaces we have and think about how we can do it better,” he said.