A key measure in the NSW budget designed to stimulate development has been described as a “drop in the ocean” that will only help tackle “one small part” of the state’s housing shortage.
The state government revealed on Tuesday a $1 billion plan to underwrite the pre-sale of 5,000 off-the-plan units, which it said would allow developers to get faster finance approval to build 15,000 homes.
The policy, which draws inspiration from initiatives in Finland and New Zealand, has been spruiked by Premier Chris Minns as a “world-leading” means of accelerating apartment building.
Planning Minister Paul Scully said developers would need to have planning approval, some pre-sales, and be ready to start construction within six months.
“This is not open slather to anyone who wants to get involved,” Mr Scully said on Wednesday.
“You may have a 100-unit development … you need to get to 70 pre-sales in order to get finance: you’ve only sold 60.
“Apply for the government guarantee … we underwrite and guarantee those last 10. One hundred new homes are unlocked.”
Martin Loosemore, a distinguished professor of construction management at the University of Technology Sydney, said the plan helped to tackle “one small part of the problem”.
“Whether it will lead to an increase in the number of dwellings being constructed is obviously open to question. The policy has just been introduced, so there’s no evidence around at the moment,” Professor Loosemore said.
“It will just ease the supply blockages potentially.
Professor says policy addresses issues
Nicole Gurran, a professor of urban and regional planning at the University of Sydney, said the policy addressed the difficulty of getting finance amid high interest rates and labour costs.
“Australia is fairly unique in … developers needing to demonstrate a high level of sales before they’re able to get finance for projects,” she said.
“Let’s hope that, if this initial tranche does result in some supply, that it’s the type of scheme that might be extended.”
Professor Gurran said the shift in Australia from the development of detached housing to units meant the financing of large projects was becoming more of a hurdle.
Under the National Housing Accord signed last year, NSW is aiming to deliver 377,000 homes by mid-2029.
Professor Loosemore pointed to a much bigger issue hampering housing development: a decline in construction productivity.
Homes are built half as quickly as they were 30 years ago, according to a report by the Australian Productivity Commission last year.
“Dwellings have obviously got more complex over that period,” Professor Loosemore said.
“But the real problems revolve around the lack of innovation in the industry. We’re still building homes in essentially the same way that we were 50 years ago.”