Speakers at an Urban Development Institute of Australia (UDIA) NSW luncheon in Wollongong highlighted that with the Illawarra-Shoalhaven now part of the six cities 'Sandstone' mega region, supply issues will have to be overcome to deliver the housing needed for the forecast growth in population.

Steve Mann, UDIA NSW CEO said that for all the discussion of the current housing crisis, things could be about to get worse.

"Are we in the middle of a housing crisis? We are actually at the start of the housing crisis," he said.

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Continuing capacity constraints from the manufacture of materials, delivery of infrastructure and ongoing disruptions from weather events would put NSW further behind its target for new builds.

Already, despite government stimulus, supply of new housing is down 16 per cent on previous year's figures, according to UDIA, creating what Mr Mann termed a "double whammy of affordability" as borrowing rates rise and costs increase.

In the next 10 years, the population of the six cities mega region is expected to grow by 1.34 million people to a total of nearly 8 million. These new residents would require an additional 400,000 new dwellings across the six cities region. In the past five years, 220,000 dwellings were completed.

While the three Sydney cities are expected to shoulder the bulk of the new dwellings, part of the rationale of linking up the Illawarra-Shoalhaven, along with the Central Coast and Newcastle/The Hunter, to the Sydney basin is to reduce the housing pressure on the NSW capital.

The capacity of the peripheral regions to accommodate extra population is in part due to undeveloped greenfield spaces, but also depends on their integration with the central cities through fast and efficient transport links.

In the Illawarra, Simon Kersten, managing director of Colliers Wollongong, highlighted that on current approval trends, Wollongong would be soon short of new housing.

"There's not many completions happening," he said. "There's a lot of talk about a lot of development in Wollongong and too many apartments but we simply don't see it."

In comparison with the rest of the state, Wollongong was lagging in development approvals and on a downward trend, Mr Kersten said.

To address this, and improve connections between the Illawarra and Western and Southwestern Sydney, Keira MP Ryan Park said the six cities megaregion highlighted the need for upgrades to Picton Road and the delivery of the Mount Ousley interchange.

"One of the top priorities as part of my ongoing advocacy for this region is the upgrade of major road infrastructure that connects us to the economic powerhouses of Southwest and Western Sydney," he said.

While fast rail connections between the central cities of the mega region is core in the vision behind the megalopolis, Mr Park said the proposed link between the Illawarra and South Western Sydney would remain on the drawing board for now.

"The most recent iteration of the Maldon-Dombarton Link is the SWIRL project," he said. "It's a project that, while important in the future, I don't think is going to come out in the short to medium term. If I was going to prioritise connections now I would prioritise getting Picton Road right and potential improvement for our South Coast rail line."

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