NSW's affordable housing market is severely lagging behind other developed countries with a Sydney think-tank arguing building more homes makes economic and social sense.
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Affordable housing means a household spends no more than 30 per cent of its gross household income on rent, excluding utilities.
It is usually managed by not-for-profit community housing providers, and/or private organisations.
A Committee for Sydney (CFS) report published Thursday said social and affordable housing is just over 4 per cent of the housing market in NSW.
This is below the OECD average of over 7 per cent and well behind European countries such as Austria (24 per cent) and the Netherlands (34 per cent).
"The committee's strong position is that permanently affordable rental housing is both essential for a functioning economy, and to ensure Sydney remains a place of opportunity for all to have a fair go," the report said.
Capella Capital director Daniel Khong, who co-authored the 33-page report, called for a reform to the planning system to speed up the delivery of housing projects.
"There's no way to get around it, and there's no magic bullet.
"Without taking this kind of strategic action, there's no way to create enough subsidised housing to meet our most urgent challenge."
Renting has become more expensive in Sydney over the past year, and has been rising since the COVID-19 pandemic, according to the latest Rental Affordability Index.
Earlier this month, Premier Dominic Perrottet said he was "throwing everything at getting more houses built" as the cost of living continues to bite.
Through the $73.5 million Rezoning Pathways Program, 10 areas will be rezoned, including five in western Sydney, at Riverstone, Camellia-Rosehill, Macquarie Park, two sites in Parramatta, plus one site in Eveleigh in central Sydney, and one site in Broadmeadow in Newcastle.
All in all 70,000 homes are slated to be built as part of the government's $2.8 billion housing package announced in the budget.
It recommended some initiatives trialled in other states that would scale up the construction pace.
The report pointed to building projects in Victoria that are over three storeys or 100 dwellings taking about eight to 10 months to be approved compared to similar projects taking two years.
It also encouraged Australian super funds to get involved in the affordable property marked while highlighting that they are more heavily invested In US because there are hardly any opportunities for them to deploy capital in affordable housing locally.
The report suggested that developers can build a mix of market, social and affordable rental housing, and return the land to government at the end of the contract (typically 40 years).
Australian Associated Press
