Beyond the 84,000 Headline: The Missing Metrics in Sydney’s Heritage vs. Housing Report
The Australian Public Policy Institute (APPI) paper The impacts of Heritage Conservation Areas on housing delivery in Sydney, authored by Policy Fellow Meagan Kanaley, arrives at a critical juncture in New South Wales planning policy. With the NSW Government striving to deliver 377,000 new homes by 2029 under the National Housing Accord and implementing major strategic initiatives like the Transport Oriented Development (TOD) program, examining all potential planning constraints is a necessary task.
This tension between housing and heritage is not unique to Sydney. It is part of a broader, highly contested discussion happening across Australia, including in Victoria, regarding how to balance ambitious state housing targets with the protection of established and valued historic environments.
At Heritage Workshop, we welcome a transparent, evidence-based examination of local heritage overlays. The APPI report rightly acknowledges that heritage delivers recognised social, cultural, and economic value, playing a vital role in shaping city identity and community character.
However, when evaluating the paper's headline assertion that removing Heritage Conservation Area (HCA) controls across five inner-Sydney Local Government Areas (LGAs) could unlock capacity for 84,771 additional dwellings, the underlying methodology, data limitations, and analytical framing warrant closer examination.
Theoretical Yields vs. Real-World Limits
The 84,771 figure relies on a "highest and best use" modeling exercise that estimates maximum physical capacity under state planning controls if HCA overlays were removed while retaining individual heritage items. As the report's data limitations section in Annex A explicitly notes, this analysis represents a baseline indicator rather than a practical site-by-site reality.
The model also explicitly bypasses mandatory minimum lot sizes and frontage requirements, which vary significantly across different dwelling types, such as dual occupancies, terrace rows, and residential flat buildings.
More critically, the theoretical geometry overlooks the market reality of site assembly. In established inner-ring LGAs like the Inner West and the City of Sydney, land is heavily fragmented into narrow, historic lot patterns and complex strata titles. Consolidating multiple individually owned properties into a site large enough to satisfy statutory controls for mid-rise apartment buildings is economically and logistically complex.
As a result, the theoretical maximum yield represents a substantial overestimate of realistic development capacity, by an order of unknown magnitude.
Correlation, Causation, and Demographics
The report highlights a contrast in population change between 2019 and 2024, noting that while outer-ring LGAs expanded rapidly, inner LGAs with high HCA coverage—such as Hunters Hill (-2.5%), Woollahra (-3.0%), and the Inner West (-0.5%)—experienced population declines. The paper implies that HCA overlays are a primary driver of this stagnation by locking low-density controls in place in perpetuity.
However, attributing post-2019 demographic shifts primarily to heritage controls conflates correlation with causation. The 2019–2024 window coincided directly with the COVID-19 pandemic, international border closures, shifts in tertiary student populations, and a structural rise in remote work that led to shrinking average household sizes as residents sought additional space.
Moreover, zooming out from this narrow five-year window reveals a broader historical reality. Since formal heritage protections and HCAs began emerging in the 1970s, inner Sydney has actually experienced massive population growth, urban renewal, and densification. History shows that heritage overlays have not prevented inner-city growth over the past half-century; rather, they have managed how that change is integrated.
Relying on a five-year, pandemic-affected snapshot to argue that HCAs structurally induce population decline ignores decades of demographic data to the contrary. The report itself admits that there is a broader lack of published evidence quantifying the direct impacts of HCAs on demographics, housing costs, and market dynamics across NSW.
The Burra Charter and Values-Based Assessment
The report suggests that HCAs are identified by local councils using outdated, non-statutory guidelines from 2002, leading to inconsistent application that does not weigh broader state objectives. While it is true that the quality of data, resourcing, and analysis feeding into local HCA designations can vary between councils, the report omits a critical piece of the Australian heritage framework: the Burra Charter.
The Burra Charter provides a world-leading, values-based model for assessing cultural significance. By focusing almost entirely on the planning, zoning, and economic impacts of HCAs, the report misses the opportunity to engage with this established best-practice methodology. In Victoria, for example, the new Local Heritage Guidelines (2026) explicitly consider heritage alongside other planning objectives.
Reforming how HCAs are applied should not mean abandoning this robust framework; rather, it requires ensuring that all local councils have the resources to apply values-based assessments rigorously and consistently, allowing our heritage to evolve with our communities.
The Urban Design and Market Value Blindspot
By focusing predominantly on lost development potential and dwelling counts, the analysis risks reducing urban planning to a purely quantitative exercise. Missing from this equation is a serious evaluation of urban design quality and community amenity.
Established HCAs provide high levels of streetscape character, mature tree canopy, walkability, and social value that contribute directly to a city's liveability. HCAs are also canvasses for high-quality, architectural renovations, additions, and in-fill development that produce gentle density.
Additionally, removing HCA controls in high-land-value LGAs does not automatically translate into affordable housing. Without explicit statutory mandates for affordable housing, market-led redevelopment in prime inner-ring locations would likely overwhelmingly produce luxury residences, doing little to alleviate housing stress for low- to moderate-income households and, in some circumstances, not increase density at all.
Embodied Carbon and Sustainability
The report appropriately notes the environmental costs of expanding greenfield development on the urban fringe, such as land clearing and increased vehicle emissions. Yet it overlooks the substantial environmental footprint of inner-city heritage demolition. Unlocking thousands of replacement dwellings under a highest-and-best-use model requires demolishing existing, structurally sound housing stock.
In contemporary sustainability frameworks, the greenest building is often the one that already exists. Demolishing established historic structures releases significant embodied carbon and generates vast amounts of construction waste, running counter to broader net-zero and circular economy objectives.
Reconciling Heritage with Housing
Rather than viewing heritage protection as a freeze on urban change, policy reform should focus on how HCAs can absorb gentle density and managed evolution. Historic urban areas can and routinely do accommodate secondary dwellings, rear additions, adaptive reuse of former commercial assets, and sympathetic infill. Opportunities for in-fill have not been exhausted: the announcement this week of high-rise housing at Woollahra Station evidences this.
The report offers several constructive recommendations, including creating a state-wide publicly accessible HCA database, establishing clearer criteria to distinguish genuine heritage value from general neighborhood character, and conducting regular statutory reviews.
Heritage conservation and housing delivery do not need to be framed as competing objectives. Auditing heritage overlays and establishing clear, evidence-based standards is a sensible step toward a more transparent planning system.
To build a truly liveable and resilient city, we must move beyond theoretical headline numbers and adopt planning frameworks that balance housing delivery with the enduring social, environmental, and cultural value of our historic urban environments.
Disclaimer: Heritage Workshop periodically advises state and local government agencies, including the NSW Government, on the intersection of housing and heritage. This analysis represents our independent professional perspective.
