Density done well key to stemming Sydney

The New South Wales Productivity Commission has thrown its weight behind affordable, higher density housing in inner-Sydney suburbs, after it identified a mass exodus of younger residents due to high housing costs.

A new paper published by the commission, "What we gain by building more homes in the right places," found that 70,000 people aged between 30 and 40 left Sydney in the period between 2016 and 2021, and only gained 35,000 people.

The report blames restrictive planning and heritage rules in the inner city "are freezing young people out."

"45,000 extra dwellings could have been built between 2017 and 2022, with no extra land, by allowing higher buildings," said productivity commissioner, Peter Achterstraat.

"High housing costs work like a regressive tax, with the burden falling disproportionately on low-income earners.

"New apartments and townhouses in inner suburbs will let young families live near their parents and their children's grandparents. The social benefits of abundant well-located homes are major."

The report found that large swathes of inner city Sydney, including North Sydney Newtown, Edgecliff and Redfern are covered by Heritage Conservation Areas, which reduces the amount of land available for new housing near the city.