Lack of homes near jobs, schools driving inequality

As well as completing fewer houses on a per-capita basis, NSW also built fewer homes in total than Victoria last year, despite having 1.5 million more residents.

Sydney rent prices have risen 10 per cent in the past year as supply dwindles.

Addressing the NSW Productivity Commission's housing symposium on Monday, the treasurer said if the state's planning system had allowed more density - such as 10-storey dwellings instead of the average seven - an extra 45,000 homes would have been built. 

"These additional 45,000 homes would have represented a bit over a two per cent increase in Sydney's private dwelling stock," he said.

"Treasury says that could have lowered apartment prices and rents by 5.5 per cent ... for a NSW citizen that is a saving of $35 a week or $1800 a year in rent on the median apartment."

Mr Mookhey said Sydney in particular needed to increase the number of homes near major work hubs and quality schools to attract residents and ensure lower socio-economic families were not further disadvantaged. 

"We have to raise educational standards in all schools, but we shouldn't tie a person's ability to get access to an excellent public school to where they can afford to live," he said.

"On average in NSW, a family will pay a 2.7 to 3.3 per cent premium to reside within a high-performing school zone, which typically adds around $36,000 to $44,000 to the price of a typical Sydney home."

The Minns government has previously announced it would create pre-approved "pattern book" designs for terraces and mid-rise developments in a bid to help reduce housing approval times.

Mr Mookhey in September handed down his first budget, which included $2.2 billion for housing infrastructure.

The majority of the money, $1.9 billion, was budgeted to support infrastructure such as roads, parks and schools to help with the future construction of extra homes.