Sydney must focus on using 'existing infrastructure' to build more dwellings

New South Wales Productivity Commissioner Peter Achterstraat has called for more dwellings to be built in Sydney's densely populated areas instead of relying on the city's outer suburbs.

"We are suggesting that there be more apartments being built on top of train stations and transport hubs," Mr Achterstraat told Sky News Australia.

"We are also suggesting more medium density - three or four stories - and even dual occupancies and granny flats.

"We have got to make use of the existing infrastructure that we have got in Sydney."