More than 8000 aging apartment blocks in Sydney's most prestigious suburbs should be knocked down to make way for glitzy new ones, a report says.

Renewing the Compact City by the UNSW's Department of the Built Environment has identified buildings - mainly in the eastern suburbs, lower north shore and southern beach suburbs - that would be viable urban renewal projects.

Chris Johnson, chief executive of property developer lobby group Urban Taskforce, welcomed the report saying demolition of apartments "way past their use-by date" would trigger a Sydney rebuilding boom.

"I think the opportunity is enormous," Mr Johnson said. "This is a terrific chance to remove some literally crumbling buildings and replace them with modern apartments. That, in turn, will revive the suburbs themselves."

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He said it could also increase supply if developers could be allowed to replace three-storey blocks with six storeys "with modern design and more open space".

However, Mr Johnson says this all depends on impending legislation allowing a majority of only 75 per cent of owners to agree to the collective sale of unit blocks. The current laws stipulate that all owners within a block need to agree to sell to a developer. "One owner can hold on for giant amounts of money and hold the rest of the owners to ransom," he said.

The UNSW researchers identified 17,367 buildings, ranging from two units to more than 100 apartments, that were constructed before 1990. Of these, 2600 could potentially be redeveloped as walk-up blocks (stairs but no lifts) and 5700 were strong contenders to be developed as high-rises.

The lower north shore and the eastern suburbs have been flagged as areas where high-rise redevelopment would be viable. Source: UNSW - Renewing the Compact City.

Another 3300 would be contenders for the wrecking ball subject to "minor tweaks" of planning regulations.

"We put together a lot of complicated factors that would govern the viability of these projects, such as cost of buy-out, building costs, management on-costs, and a developer's profit margin of 20 per cent," says Professor Bill Randolph, Director of the City Futures Research Centre at UNSW.

"Then we looked at local factors such as the size of the blocks, the current floor space ratio and height restrictions."

The UNSW report reveals that, while some areas are ripe for renewal, others that desperately need an upgrade may miss out.

"When we look at housing affordability, in some areas like Cabramatta, for instance, the numbers don't stack up," says Professor Randolph.

"Developers are not going to buy up and knock down older buildings if they can't make a profit on the new ones. And in some areas the property prices simply won't sustain renewal."

By far the highest concentration of potential knock-down-and-rebuild sites were in the eastern suburbs, lower north shore and the Cronulla area.

"This is where you see the different factors come into play," says Professor Randolph.

"For instance, in Mosman, you don't need to go up in height to make projects viable as the value of the new units would be that much greater."

He said the next phase of their research would look at housing affordability.

Jimmy Thomson also writes the Flat Chat column and edits the related website.