The state has been warned that it is unlikely to meet its nationally agreed, five-year housing target as a new report cautions that a raft of major infrastructure projects are "crowding out" residential building.
The NSW Productivity and Equality Commission report, released on Wednesday, recommended shifting the migration intake to recognise in-demand construction skills and removing barriers to increased density in the most feasible locations.
The commission also said the development process must be streamlined, something Premier Chris Minns has repeatedly emphasised as a priority as Labor makes the delivery of extra housing a major focus for a state with the nation's priciest property market.
Restrictions on housing density in many areas need to be lifted, the report says. (Mick Tsikas/AAP PHOTOS)
In a speech at a Business Western Sydney Housing Now conference, Mr Minns promised a series of extra planning reforms.
"It will be designed to speed up approvals, cut red tape and, at the end of the day, build more homes," he said.
The premier acknowledged government agencies often slowed down the approvals process.
"Once you run the gauntlet of planning, you're left waiting for transport for NSW, or Sydney Water or local government ... this can't sit on public service desks for months on end, waiting for a decision with the cost of construction," he said.
One of the government's signature planning policies involves the blanket rezoning of land around metro stations and existing transport hubs for higher-density housing.
The commission said further gains could be made from expanding that program into Sydney's well-established eastern and northern suburbs.
Mr Minns said that would likely be a few years down the line but he was "happy to do it".
Creating a pro-housing regulatory environment and avoiding excessive delays should be prioritised, the report found, pointing to the potential to relax requirements around minimum apartment sizes and car-parking rules.
But the commission also highlighted a raft of major infrastructure projects, including Sydney's metro network, motorways and light rail lines, were blowing out the costs of house-building due to "limited" capacity in the construction sector.
Chris Minns says the status quo on housing rules isn't working. (Bianca De Marchi/AAP PHOTOS)
Master Builders Australia recently projected NSW would fall the furthest behind meeting its contribution to a national goal of 1.2 million extra homes by mid-2029.
Committed to building 377,000 homes within five years, NSW is only on track to produce 303,280 - a shortfall of 73,700 homes.
Mr Minns said NSW wouldn't back away from the challenge of building the thousands of homes required to stop young people being locked out of the housing market.
"Doing nothing is not an option," he said.
In February, NSW Productivity Commissioner Peter Achterstraat said Sydney was on track to be "the city with no grandchildren" as height restrictions and high housing costs drove young families to the regions and interstate.
Sydney lost twice as many people aged 30 to 40 as it gained between 2016 and 2021, with unaffordable housing the driving factor.
