Ahead of the NSW Government’s 2025-26 Budget in June, Urban Development Institute of Australia NSW (UDIA) is calling on the NSW Government to take a longer-term, investment-driven approach to housing supply, by committing to greater infrastructure investment that supports and enables more homes to be built.
“Development feasibilities have never been more challenged, but we know there are feasible projects in the market that just need basic enabling infrastructure to start. Without infrastructure investment upfront, development stalls but the current Housing and Productivity Contribution (H&PC) scheme only collects funding from development after approvals, creating a critical funding gap,” said UDIA NSW CEO, Stuart Ayres.
Developers are ready and willing to deliver this infrastructure now, through works in kind (WIK) arrangements, before funding is accumulated by Government.
“Developers have been waiting 18 months since the start of the new contributions scheme for a WIK policy. We urge the Government to use this budget to establish and fund a WIK policy that allows developers to crack on and unlock housing faster. As housing is delivered, state revenue from stamp duty and other sources increases, creating a virtuous cycle of reinvestment in infrastructure,” said Stuart Ayres.
UDIA’s Pre Budget Submission is also recommending a $435m per annum investment for four years in 66 enabling infrastructure projects, identified in Western Sydney, Illawarra/Shoalhaven and Hunter Building blocks reports, that can collectively unlock
80,000 new homes, representing 20% of the NSW Housing Accord target.
“It’s time for the Premier and Treasurer to double down on the supply side of housing. Homes need infrastructure, without it they simply won’t be built.”
“With feasibility issues in apartment developments likely to limit the Government’s ambitious infill housing reforms in the next 5 years, this investment will support supporting housing in existing greenfield growth areas across the Sydney, Illawarra, Central Coast and Hunter regions,” Mr Ayres said.
To help improve the feasibility of apartment projects in the short term, UDIA is recommending pushing back the timing of when contributions are paid until after purchasers settle on their new homes.
“With contributions accounting for up to 30% of a total project cost, requiring developers to pay this when they lodge a DA is stopping many large housing projects in their tracks. Allowing these payments to be made when sale proceeds have been received, will drastically improve feasibility without reducing overall government tax receipts.”
UDIA acknowledges the Government’s decision to adopt its recommendation for a financing guarantee mechanism to support development feasibilities in last year’s budget and is calling for the scheme to be fully funded in this year’s budget.
“Our members are telling us this scheme could be a game changer to assist projects currently constrained by tighter lending conditions and market uncertainty and it’s critical this scheme is funded, and open for application as soon as possible,” said Stuart Ayres.
To read our full submission click here