They include shifting the migration intake to recognise worker skills to help boost construction sector capability, while also removing barriers to density in the most feasible locations.
The commission also said the development process must be streamlined, something Premier Chris Minns has repeatedly emphasised as a priority.
Restrictions on housing density in many areas need to be lifted, the report states. (Mick Tsikas/AAP PHOTOS)
A signature planning policy involves the blanket rezoning of land around metro stations and transport hubs for higher-density properties.
The commission said further gains could be made from expanding that program into Sydney's eastern and northern suburbs.
It also found long approval timeframes, planning constraints and "onerous" regulations were blowing out the development process.
Creating a pro-housing regulatory environment and avoiding excessive delays should be prioritised, the report found.
"That means ensuring building and planning regulations unrelated to safety - like minimum apartment sizes and requirements for car parks - do not hold feasibility back," the report read.
"Relaxing such requirements and evaluating the impact of other building regulation on feasibility can support more housing supply."
Premier Chris Minns says the status quo on housing rules isn't working. (Bianca De Marchi/AAP PHOTOS)
The premier said NSW wouldn't back away from the challenge of building the thousands of homes required to unlock young people from the housing market.
"The commissioner warned in his last report that we're at risk of being a city with no young people … doing nothing is not an option," Mr Minns said.
"This means honestly assessing the conditions we are working in, and thinking innovatively about what we can do better like this report does."
It is the second major report the commission has delivered in 2024.
In February, Commissioner Peter Achterstraat found Sydney was on track to be "the city with no grandchildren" as height restrictions and high housing costs drive young families to the regions and interstate.
Sydney lost twice as many people aged 30 to 40 as it gained between 2016 and 2021, with unaffordable housing the driving factor.
Earlier this week, NSW's poor progress towards nationally-agreed housing targets was revealed when Master Builders Australia found a massive shortfall on 2029 goals.
Committed to building 377,000 new homes across the next five years, NSW is only on track to produce 303,280 dwellings by July 2029, according to its latest data - a 73,700-house shortfall.
The premier said the state's sluggish planning system was the main reason for slow progress.
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