Sydney is on track to be “the city with no grandchildren” as high housing costs drive young families to the regions and interstate.

NSW Productivity Commission research found Sydney lost twice as many people aged from 30 to 40 as it gained between 2016 and 2021.

The driving factor for the exodus was unaffordable housing costs, highlighting the need for greater housing density across the city, the research found.

“Sydney is losing its 30- to 40-year-olds; if we don’t act, we could become known as the city with no grandchildren,” Productivity Commissioner Peter Achterstraat said.

“Many young families are leaving Sydney because they can’t afford to buy a home, or they can only afford one in the outer suburbs with a long commute.”

Building up inner-Sydney suburbs, not just adding homes on the city’s fringes, would boost productivity and wages, cut consumers’ carbon emissions and preserve land and green spaces, Achterstraat said.

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

“Sydney needs hundreds of thousands of new homes over the next two decades.

“Building more in the places people want to live is a key piece to solving the housing jigsaw puzzle.”

The Productivity Commission research found 45,000 extra dwellings could have been built between 2017 and 2022 without extra land being released by raising building heights.

Achterstraat called for a fresh discussion on heritage restrictions on housing close to the city centre and the role this can play in keeping prices high.

He pointed to the proliferation of Heritage Conservation Areas, which restrict new housing.

More than half of residential land in prime suburbs such as North Sydney, Newtown, Edgecliff and Redfern are covered by the restrictions.

“New apartments and townhouses in inner suburbs will let young families live near their parents and their children’s grandparents,” Mr Achterstraat said.

“The social benefits of abundant well-located homes are major.

“We can preserve the gems of Sydney’s heritage without inadvertently freezing young people out.”

– AAP