The city is second only to Hong Kong in terms of housing unaffordability, with an average home costing more than 13 times the median salary, according to the Committee for Sydney report released on Thursday.
More than just a short-term crisis, housing is a chronic issue for Sydney and represents a serious threat to the future of the city if nothing is done, says the committee's chief executive, Eamon Waterford.
Mr Waterford said the costs are being felt most by young Sydneysiders at the start of their careers, "putting a handbrake" on opportunities that would have been open to them if housing was more accessible and affordable.
"If we don't take urgent and sustained action, chronic housing unaffordability will continue to erode Sydney's competitiveness on the global stage and our city's long-term economic success," he said.
The report identified $1.5 billion in lost talent due to out-migration and diminished appeal, on top of $6.8 billion in lost productivity, and $2.9 billion in reduced innovation, including less patents and start-ups.
Rental availability and affordability are also at crisis levels, with 35.3 per cent of Sydney renter households experiencing rental stress, meaning they pay more than 30 per cent of monthly income on housing costs.
The report recommended three key actions to help fix the issue, beginning with introducing an inclusionary zoning target, to provide affordable housing in new developments on all rezonings.
It also recommended the government invest in building much more social and affordable housing, and significantly increase the supply of high-quality housing, with good access to transport, open spaces, schools, child care, shops and other services.
"We can't solve this overnight, but we can commit to the bold, brave and long-term program required to send Sydney's chronic housing crisis into remission and stop future relapses," Mr Waterford said.
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