Sydney is at risk of becoming “the city with no grandchildren”, a senior government official has warned, as high housing costs drive young families to leave.

The state capital is losing twice as many people aged 30 to 40 as it gains, according to a paper by the NSW Productivity Commission.

“If we don’t act, we could become a city with no grandchildren,” the agency’s commissioner Peter Achterstraat said.

Adrian Tucci, 38, left his Sydney roots last month and moved his family from Leichhardt in the city’s inner west to Cairns in Far North Queensland.

“We can’t afford a multimillion-dollar mortgage raising two kids, with my wife wanting to be a stay-at-home mum,” Mr Tucci said.

The painter said he and his wife, Nicole, bought a block of three units by the beach in the tropical city for less than $1 million.

“It was a difficult decision to leave family and friends,” he said.

Jo and Andy Roe started their family while living in a two-bedroom apartment they owned on Sydney’s lower north shore.

After having their second child, the couple decided it was time to upsize.

“We would like our kids to have their own bedrooms,” Ms Roe, 41, said.

After failing to find a larger property within their price range, the family relocated to Canberra in 2021.

“A small two-bedroom apartment where we were in Sydney was the price of a four-bedroom house in the suburbs in Canberra, Mr Roe, 44, said.

“We really loved Sydney. And still do. We had good jobs, great friends.

“It was really about needing three bedrooms for less than $2 million.”

Major loss to workforce

The productivity commission found Sydney lost about 35,000 people aged 30-40 between 2016 and 2021.

The exodus of that group is a problem, according to Mr Achterstraat, because people in that age range are among the most productive in the workforce.

“They’ve generally completed their training, they’ve had 10 or more years’ experience, and the majority are tech savvy,” he said.

“If these productive workers leave Sydney, then it means the rest of us who stay here are going to have to work a little bit harder to produce the same level of goods and services.”

When Mr Tucci lived in Sydney, his painting business employed up to nine tradesmen.

He said most of his former workers have now left the Harbour City.

“They’re in same boat … they’ve gone to the Gold Coast, Adelaide, Perth, places like that, just so that they can afford a house as well [and] raise their kids.”

Mr Tucci said his parents, who still live in Sydney, supported his family’s decision to leave, but were sad about not getting to see their grandchildren as much.

Calls to review heritage protections

The productivity commission blames Sydney’s high housing prices on a lack of supply.

In its past two papers, the commission made the case for boosting density closer to the city in areas “where people want to live” and “where infrastructure costs less”.

But its latest report found about a quarter of residential-zoned land within 10 kilometres of the CBD is subject to heritage protection restricting redevelopment.

Entire suburbs have been declared heritage conservation areas by some councils.

Those places include Haberfield and Balmain, in the inner west; Elizabeth Bay and Paddington, in the eastern suburbs; and Cremorne Point on the north shore.

The report argues the value of architectural heritage ought to be balanced with the value of “renewal, diversity and vibrancy”.

The commissioner is calling for a review of heritage protections in areas where the restrictions are widespread.

“Where are those gems which we really want to preserve?,” Mr Achterstraat said.

“There may be rundown shops and all sorts of things which probably doesn’t fit into the category of heritage.”

He said experts should be brought in to determine whether some places deemed heritage could be more appropriately used to house people who want to live in the area.

“It’d be lovely if more people could live closer to the heritage so that they can benefit from it and visit it more often.”