The Pulse | 15 October 2025

From Zoning to Groaning – NSW's Race to Meet Housing Targets

The NSW construction landscape continues to be shaped state-led intervention aimed at improving housing supply, set against a backdrop of infrastructure gaps and emerging commercial risks. 

This edition of The Pulse highlights a government actively deploying a suite of tools, from land audits unlocking thousands of potential homes [8] and fast-tracked rezoning [3, 5] to a $1 billion pre-sale finance guarantee [18], to stimulate delivery. 

However, this top-down push is creating tension. In southwest Sydney, essential services delays have led to temporary housing caps until supporting infrastructure can be delivered [1]. 

Simultaneously, new planning incentives are creating unintended consequences, making specialised seniors' housing commercially less viable compared than general residential projects [12]. This further highlights disputes between state housing mandates and local councils advocating for infrastructure-first planning [13]. 

Alongside these challenges, a robust pipeline of major urban renewal [4, 11] and renewable energy projects [6, 17] presents considerable opportunity, though progress is influenced by planning timelines [10] and evolving energy market conditions [16].

State-Led Housing Intervention and its Complexities

The NSW Government is advancing its multi-pronged strategy to accelerate housing supply, though implementation continues to bring challenges.

To expedite construction, regulatory tools like the NSW Housing Pattern Book are being promoted, offering a 10-day planning approval pathway for pre-approved designs [8, 22]. In conjunction, the rezoning of land around transport hubs, including Transport-Oriented Development (TOD) zones in areas like Boolaroo and St Leonards, are set to deliver upwards of 1,000 new dwellings [3, 14]. Further, the NSW government’s recently launched $1 billion Pre-sale Finance Guarantee, aimed to support approved apartment projects from planning to construction by has attracted support from key industry bodies including the Strata Community Association (NSW) [18].

However, this supply-side push is encountering headwinds. In southwest Sydney, a failure by state agencies to deliver essential water and sewerage infrastructure has prompted the government to impose a cap of just 2,499 homes in a precinct originally earmarked for 16,000 [1]. This disconnect between zoning and infrastructure readiness highlights a risk for developers. 

Furthermore, policy incentives are creating market distortions; a 30% bonus for developments with affordable housing now commercially outweighs the 15-25% bonus for seniors' living, making purpose-built retirement villages unfeasible for providers [12]. 

This policy friction is evident in disputes with local governments, such as Woollahra Council, which is calling for a freeze on development until infrastructure commitments are guaranteed [13]. The result is a widening gap between policy implementation and reality, particularly in Western Sydney, where a 38% shortfall in approvals versus annual requirements persists despite an 80,000-dwelling pipeline [20].

Major Project Pipeline: Urban Renewal and Infrastructure

Despite these housing policy challenges, the NSW project pipeline is still expanding with high-value urban renewal and critical infrastructure developments. 

In Sydney, several billion-dollar mixed-use precincts are advancing, transforming underutilised sites. These include the $900 million ‘Stanmore Village’ on the former Cyprus club site [4], the $1 billion redevelopment of the InterContinental Hotel in Double Bay [11] and a proposed $1 billion project to build nearly 2000 apartments next to Penrith Stadium [21].

These projects reflect a strong market trend towards integrated residential, retail and commercial hubs in prime metropolitan locations. The government is also actively facilitating development on its own land, shortlisting major developers for a 3301sq m site in St Leonards with the potential for over 400 homes in a mixed-use tower [14].

This wave of development extends to regional centres. In Newcastle, the City is seeking expressions of interest to transform Queens Wharf into a world-class waterfront destination, unlocking a rare harbourside opportunity [9]. The state is also directly funding and delivering social housing, with a $12.8 million project in East Albury nearing completion as part of a broader $6.6 billion investment to address regional housing shortages [23]. 

Beyond housing, investment in public infrastructure is creating specialised construction opportunities. A key example is the $145 million contract awarded for Sydney’s first purpose-built electric bus depot in Macquarie Park [7]. This project, part of a two-decade plan to transition 8,000 buses to zero-emissions vehicles, signals a long-term government commitment to sustainable infrastructure and the specialised design, construction and electrical engineering services [7]. 

This diverse pipeline features sustained investor and government confidence, offering opportunities for contractors across multiple sectors.

The Renewable Energy Transition: Opportunities and Challenges

NSW continues its major transformation in energy sector, with government backing for large-scale renewable projects creating a new frontier for the construction industry. 

Federal approval has been granted for the massive 1.3 GW Pottinger Wind Farm in the Riverina region, a project set to create up to 900 construction jobs and require substantial road upgrades [6, 19]. 

 Further North, the development of the Hunter-Central Coast Renewable Energy Zone (REZ) continues [17]. To support the sheer scale of activity in the region, the state-owned entity EnergyCo is supporting in the planning and delivery of transmission projects, implementing a "Hunter-first" procurement policy to ensure local job and supply chain opportunities from major infrastructure builds [17]. This strategic repurposing of traditional industrial heartlands leverages existing skills in complex project management and high-voltage electrical work, creating a "brownfield advantage" for the region [17].

However, the transition is burdened with significant commercial and regulatory risks. A critical disconnect between policy and implementation has emerged, with reports that 20 wind farm projects with awarded contracts are yet to secure planning approvals [10]. This creates uncertainty for developers and contractors, heightened by the fact that many projects depend on new transmission lines that have not yet been built [10]. 

Moreover, sudden changes in government strategy, including EnergyCo's recent "backflip" on a transmission corridor in Walcha, have eroded landowner trust and highlight regulatory instability [10]. This unpredictability is mirrored in the energy market itself, where grid constraints, generation outages and declining solar output recently caused a spot price spike to the market cap of $20,300/MWh [16]. For construction firms, this signals a dual risk: project delays due to planning bottlenecks and escalating operational costs from an increasingly unstable and expensive energy supply [16].

Takeaways

Navigating NSW's Evolving Planning and Approval Landscape

The NSW Government's housing agenda is reshaping the state's planning and regulatory environment, creating both streamlined pathways and new legal risks. Professionals must proactively engage with mechanisms like the NSW Housing Pattern Book, which offers a 10-day approval pathway for compliant designs, reducing traditional planning delays and associated holding costs [8, 22]. 

Similarly, understanding the specific controls and incentives within state-led rezoning initiatives, such as Transport Oriented Development (TOD) zones [3, 14], is essential for maximising development potential. However, the government's willingness to require development caps where infrastructure is lacking, as seen in southwest Sydney [1], introduces a legal and commercial risk. 

This emphasises the need for precise due diligence on infrastructure readiness and the inclusion of contractual clauses that address potential state-imposed delays or project curtailment. The conflict between state mandates and local council demands [13] further complicates the landscape, requiring developers to prepare for multi-layered engagement and potential legal challenges related to planning authority.

Contractual Risk Management in a Changing Market

The current market conditions in NSW demand heightened vigilance in contractual risk management, particularly for energy and housing projects. The revelation that numerous renewable energy projects have been awarded contracts without securing planning approvals is problematic in the realisation of project pipelines [10]. Contractors and developers must conduct comprehensive due diligence to verify the status of all necessary statutory approvals before executing contracts, ensuring that agreements contain clear conditions precedent related to planning consent to avoid exposure to non-viable projects. 

Furthermore, the energy price instability [16] necessitates that contracts clearly allocate the risk of increasing electricity costs, which impact both site operations and the cost of materials. 

For residential developers, the $1 billion Pre-sale Finance Guarantee [18] presents an opportunity, but eligibility is tied to oversight from the NSW Building Commissioner. This links the guarantee to strict compliance with legislation like the Design and Building Practitioners Act 2020, making robust quality assurance and defect management not just a practical necessity but a prerequisite for accessing government support.

Final Thoughts 

The NSW construction sector continues to navigate a period of intense, state-driven change. The government's intervention in housing and energy presents a pipeline of opportunity, but the path is layered with complexity. Success will no longer be defined simply by the ability to build, but by the strategic capacity to navigate a fluid regulatory landscape, mitigate new commercial risks and align with shifting policy priorities. 

The disconnect between ambitious targets for housing and renewables and the on-the-ground realities of infrastructure deficits and planning bottlenecks is the central challenge. Professionals who can master the intricacies of expedited approval pathways, manage the risks of infrastructure-contingent development and adapt to cost pressures will be best positioned to succeed in this dynamic and demanding, but potentially lucrative market.

1. by Jake McCallum (10 October 2025). NSW Government impose 2500 home cap in southwest Sydney precinct slated for 16,000 houses. https://www.ntnews.com.au/news/nsw/nsw-government-impose-2500-home-cap-in-southwest-sydney-precinct-slated-for-16000-houses/news-story/dfabd54b5b97943f163377b7748bbf49?btr=d92399504c9b89cf41b86b04dc161bdf
2. MATTHEW WAI (9 October 2025). NAB delivers over $2bn in green finance lending. https://www.fssustainability.com.au/nab-delivers-over-2bn-in-green-finance-lending
3. by Jamieson Murphy (9 October 2025). Rezoning application to turn 120 homes into 1200. https://www.sconeadvocate.com.au/story/9082915/new-housing-plan-at-munibung-road-boolaroo-unveiled/
4. Commercial Real Estate (9 October 2025). Sydney’s Cyprus club site set for $900 million transformation. https://www.commercialrealestate.com.au/news/sydneys-cyprus-club-site-set-for-900-million-transformation-2-1436939/
5. The Urban Developer (9 October 2025). Rezoning Sought to Pave Way for $340m Leppington Scheme. https://www.theurbandeveloper.com/articles/leppington-12-tower-mixed-use-development-nsw
6. Process Technology (9 October 2025). New Riverina wind farm to generate 1.3 GW. https://www.processonline.com.au/content/business/news/new-riverina-wind-farm-to-generate-1-3-gw-640674741
7. ECD (Electrical+Comms+Data) (14 October 2025). Sydney to receive its first purpose-built electric bus depot. https://www.ecdonline.com.au/content/efficiency-renewables/news/sydney-to-receive-its-first-purpose-built-electric-bus-depot-1361722295
8. Australian Financial News (9 October 2025). Land audit unlocks another 600 dwellings. https://afndaily.com.au/2025/10/09/land-audit-unlocks-another-600-dwellings/
9. Commercial Real Estate | by Kirstan Ross. Queens Wharf: Unlock Newcastle's harbourside potential in rare waterfront development opportunity. https://www.commercialrealestate.com.au/news/queens-wharf-unlock-newcastles-harbourside-potential-in-rare-waterfront-development-opportunity-1439393/
10. Sky News | by Matt Hampson. NSW farmers ‘in tears’ over state-run renewables project backflip on towering transmission corridor. https://www.skynews.com.au/australia-news/nsw-farmers-in-tears-over-staterun-renewables-project-backflip-on-towering-transmission-corridor/news-story/2dbfe65799835ef5899a1b132d049840
11. Australian Hospitality Directory. InterContinental Double Bay to make way for $1BN mixed-use precinct. https://www.hospitalitydirectory.com.au/industry-news/22744-intercontinental-double-bay-to-make-way-for-1bn-mixed-use-precinct/
12. by Madeleine Bower (15 October 2025). Sydney-based seniors have concerns over NSW government housing policy. https://www.ntnews.com.au/news/nsw/sydneybased-seniors-have-concerns-over-nsw-government-housing-policy/news-story/21b7182db9946ff6256f4c2f4244354c?btr=96e5ae321517b7c755e5da64afc9772f
13. The Daily Telegraph | by Jake McCallum (14 October 2025). Woollahra train station, housing plan: Council issues demands over future fate of city’s east. https://www.dailytelegraph.com.au/news/nsw/woollahra-train-station-housing-plan-council-issues-demands-to-nsw-government-over-future-fate-of-citys-east/news-story/f6f156b5aa8c6a78c206f190f39e3c89?btr=38df37d26d5eae9593cdd98ad198cc18
14. The Urban Developer | by Patrick Lau (14 October 2025). Deicorp, Hyecorp, Thirdi Shortlisted for St Leonards Site. https://www.theurbandeveloper.com/articles/deicorp-hyecorp-thirdi-shortlisted-for-st-leonards-site
15. Wood Central | by Jason Ross (13 October 2025). Aussie Developer Targets Sydney and Brisbane as MODEL Goes National. https://woodcentral.com.au/aussie-developer-targets-sydney-brisbane-as-model-goes-national/
16. WattClarity | by Paul McArdle (13 October 2025). An initial look at the Spot Price spike in NSW at 17:55 on Friday 10th October 2025. https://wattclarity.com.au/articles/2025/10/10oct-nsw-volatility-part1/
17. Gloucester Advocate | by Boris Novak (13 October 2025). Hunter's new-energy transformation powers forward. https://www.gloucesteradvocate.com.au/story/9083989/hunters-energy-transformation-projects-and-promises/
18. The Northern Rivers Times (13 October 2025). SCA hails $1B guarantee as a game changer for strata housing. https://thenorthernriverstimes.com.au/breaking-news/sca-hails-1b-guarantee-as-a-game-changer-for-strata-housing/
19. Green Review (13 October 2025). Australian government approves massive Riverina wind farm. https://greenreview.com.au/energy/australian-government-approves-massive-riverina-wind-farm/#:~:text=The%20Australian%20government%20has%20approved,to%20power%20around%20590%2C000%20homes. 
20. by Nina Hendy (14 October 2025). 'Dangerously behind': Housing shortfall in Western Sydney revealed. https://www.realestate.com.au/news/dangerously-behind-housing-shortfall-in-western-sydney-revealed/?cspt=1760480019|3582588e037b7bf86c91b89e7483a40c
21. WA Today (12 October 2025). Revealed: Plans for almost 2000 apartments next to Sydney stadium. https://www.watoday.com.au/national/nsw/revealed-plans-for-almost-2000-apartments-next-to-sydney-stadium-20251008-p5n0xw.html
22. News.com.au (11 October 2025). Sydney suburbs leading the way in housing density growth. https://www.news.com.au/finance/real-estate/sydney-suburbs-leading-the-way-in-housing-density-growth/news-story/3f31b3c2bf60994c7906acc99f413ab5?btr=905bcf79f0027d0328e4dbe00ec4f501
23. by Erin Hee (11 October 2025). NSW Government to deliver more social housing in East Albury. https://regionriverina.com.au/nsw-government-to-deliver-more-social-housing-in-east-albury/108001/