The Pulse | 24 September 2025

The $1bn Bet: Can NSW Build Through Resistance?

This edition of The Pulse explores how NSW is tackling its housing crisis, balancing government action with market challenges and local opposition.

The government is deploying major financial and regulatory levers, headlined by a $1 billion Presale Finance Guarantee (PFG) program designed to unlock stalled residential projects and accelerate supply [12, 15, 17]. 

This supply-side push is occurring alongside bipartisan support for broader planning reforms aimed at cutting red tape [9]. These initiatives are set against a backdrop of demand pressures, fuelled by high net migration [3, 7] and a mortgage market where investor loans are outpacing owner-occupier lending [14]. This dynamic, coupled with federal demand-side schemes that the RBA warns may inflate prices [21], continues to strain affordability. 

At the local level, state-driven development ambitions are frequently clashing with community concerns over infrastructure, density, and consultation, creating project risks and delays in key regional and metropolitan areas [2, 5, 18]. 
Looking ahead, the industry must navigate this interplay of top-down policy, market fundamentals, and grassroots sentiment.

State Intervention Accelerates with $1bn Finance Guarantee

The NSW Government has launched a  market intervention with its $1 billion Presale Finance Guarantee (PFG) program, aiming to convert stalled development approvals into active construction sites [12, 15, 17]. The five-year scheme allows the state to acquire up to 50% of off-the-plan homes in eligible projects, directly addressing the presale hurdles that have stalled over 13,000 approved homes [19, 20, 22]. 

This measure is designed to de-risk projects for lenders, with developers now able to proceed without meeting traditional presale targets [12]. 

The initiative  responds  to the growing delay between approval and commencement, which has increased by 39% over the past five years [12, 15]. Eligibility for the program is strict, requiring developers to have planning approval, indicative finance, and be ready to commence construction within six months [17, 20]. 

Critically, the Building Commission NSW will be involved in vetting applications to ensure projects meet quality benchmarks, reinforcing the government's stated goal of not sacrificing quality for quantity [19, 22]. This financial lever is complemented by a broader push for planning reform, which has garnered bipartisan support to fix "planning logjams" and better integrate infrastructure with new housing developments [9].

Demand Pressures and Market Imbalances Intensify

While policy focuses on supply, the NSW construction market continues to grapple with demand-side pressures. High net migration, which has doubled from pre-pandemic levels is a major driver of housing demand [3, 7]. Over the 2025 March quarter, the Australian Bureau of Statistics reported 110,100 new arrivals nationally, suggesting projections of nearly 450,000 annually [24]. 

This influx is straining a market already facing a critical apartment supply shortfall, with Sydney projected to deliver only 11,700 units annually against an estimated demand of 30,000 [11]. This imbalance is reflected in the finance sector, where investor loans in NSW grew 600% faster than owner-occupier mortgages in the year to June 2025 [14]. 

Compounding this, federal initiatives like the expanded First Home Guarantee Scheme are being criticised by the RBA and other experts as "bandaid fixes" that stimulate demand without addressing supply [10, 21]. The RBA warns such schemes risk pushing prices higher, potentially trapping buyers in excessive debt and negating any benefits [10, 21].

 In response to these conditions, the Build-to-Rent (BtR) sector is gaining significant traction as an alternative model, with major developers like Coronation Property investing heavily in large-scale projects in areas like Waterloo and St Leonards [1, 4].

Local Resistance Highlights Planning and Consultation Deficits

Despite the urgent need for housing, state-led and large-scale development proposals are facing significant and organised community opposition, exposing a disconnect between high-level policy and local implementation. In Mullumbimby, a Landcom affordable housing project was overwhelmingly rejected by 91.4% of surveyed residents, who cited concerns over building height, design character, and loss of parking [2]. 

Similarly, in Gwynneville, a proposal to add up to 1,250 new homes has been met with resident frustration over a lack of a comprehensive masterplan and fears of a "piecemeal" DA-by-DA process that neglects infrastructure needs [5]. 

Further, a plan to build over 30,000 homes in Sydney's inner west has also sparked "furious" debate and clashes at public meetings [18]. 

A common thread in these disputes is the perception of inadequate consultation and a top-down approach that fails to address local context [2, 5]. Residents express concern that they are being labelled "NIMBYs" (Not in My Backyard) while their primary desire is for well-planned development that includes necessary upgrades to schools, roads, and community services [5, 9]. These conflicts highlight a risk for developers, where failure to secure a social license can lead to protracted delays, legal challenges, and project uncertainty [2, 5].

Takeaways

Navigating the Presale Finance Guarantee and Quality Assurance

The $1 billion Presale Finance Guarantee (PFG) program presents a commercial opportunity for developers to de-risk projects and secure finance [12, 15]. However, engagement with this scheme comes with direct regulatory oversight. A key condition is the involvement of the Building Commission NSW in the application process to vet the "capacity, credibility and capability" of builders [17, 20]. 

This implies that developers seeking the guarantee must have a demonstrable track record of compliance and quality. This aligns with the ongoing enforcement focus of legislation like the Design and Building Practitioners Act 2020 (DBPA). 

Professionals should prepare for heightened scrutiny of their project plans, quality assurance systems, and corporate history a s part of the PFG application. The government's explicit commitment that it "won’t be sacrificing quality for quantity" signals that leveraging this financial support will require adherence to the highest standards of regulatory compliance, making robust documentation and a clean compliance record essential [19, 22].

The Strategic Use of State Significant Development Pathways

Recent development proposals demonstrate a strategic trend among developers to pivot projects towards the State Significant Development (SSD) pathway to navigate local planning impasses and leverage state-level incentives [1, 8, 13]. 
A prime example is the Potts Point project by Time & Place, which, after a three-year stalemate with local council and a Land and Environment Court appeal, was revised to utilise the SSD framework [13]. By incorporating a 15% affordable housing component, the project became eligible for significant bonuses, including a 30% height increase, under state planning policies [13]. 

This pathway offers developers a "clear framework, state oversight and certainty on timing," which can be invaluable for complex, city-shaping projects [13]. 

For developers and their legal advisors, this highlights the importance of thoroughly assessing the eligibility of large-scale projects for the SSD process, particularly where alignment with state objectives like affordable housing or transport-oriented development can unlock significant planning advantages and provide a more predictable route than local council approvals under the Environmental Planning and Assessment Act 1979.

Managing Risk in Community and Stakeholder Engagement

The widespread community opposition seen in Mullumbimby, Gwynneville, and Sydney's inner west underscores the escalating legal and commercial risks associated with inadequate stakeholder engagement [2, 5, 18]. The Mullumbimby case, for instance, involved allegations of non-compliance with the notification requirements of the local Community Participation Plan [2]. 

Failure to genuinely consult can lead to project delays, costly legal challenges in the Land and Environment Court, and reputational damage. Developers must treat community consultation not as a procedural hurdle but as a critical risk mitigation strategy. This involves moving beyond statutory minimums to engage early and transparently, co-designing where possible, and demonstrably addressing community concerns regarding infrastructure, traffic, and local character. 

Proactively developing a robust engagement strategy is essential to securing the social license needed for project success and avoiding the "gridlock" that can render a technically approved project unviable [15].

Final Thoughts 

The NSW construction sector is at a pivotal moment, defined by the tension between  bold government intervention and persistent market constraints. 

The state's $1 billion finance guarantee and planning reforms are decisive moves to stimulate supply, creating opportunities for shovel-ready projects [12, 20]. 

However, these top-down solutions do not operate in a vacuum. The success of these policies will be heavily dependent on the industry's ability to navigate fundamental challenges that remain firmly in place: severe skilled labour shortages [19, 22], escalating construction costs [11], and deep-seated community resistance to densification [2, 5, 18]. 

For professionals, the path forward requires a dual focus: leveraging new government support mechanisms while simultaneously managing on-the-ground project risks through meticulous planning, robust stakeholder engagement, and a commitment to quality assurance under the watchful eye of the state's regulators.

1. The Urban Developer | by Phil Bartsch  (19 September 2025). Coronation Stakes its BtR Claim in Sydney’s Waterloo. https://www.theurbandeveloper.com/articles/coronation-waterloo-build-to-rent-project
2. Echo | by Hans Lovejoy  (19 September 2025). Mullum residents reject large Landcom/Council DA. https://www.echo.net.au/2025/09/2411-mullum-residents-overwhelmingly-reject-large-landcom-council-da/
3. Real Estate | by Aidan Devine (19 September 2025). Housing crisis: What new migration data reveals about Australia. https://www.realestate.com.au/news/housing-crisis-what-new-migration-data-reveals-about-australia/?cspt=1758668450|b6a9e7d3e008a8a9c4a1450b73bf1f66
4. BTR News Australia | by Joe Mellor. (n.d.). Coronation submits plans for Waterloo BTR. https://www.btrnews.au/coronation-submits-plans-for-waterloo-btr/
5. The Illawarra Flame. (n.d.). Build strong relationships for best result in Gwynneville development, housing expert tells locals. https://www.theillawarraflame.com.au/news/build-strong-relationships-for-best-result-in-gwynneville-development-housing-expert-tells-locals
6. The New Daily | by Jen Melocco. (n.d.). How ‘Ikea for buildings’ could solve our housing crisis. https://www.thenewdaily.com.au/finance/property/2025/09/18/flat-pack-housing-crisis
7. The Epoch Times | by Naziya Alvi Rahman (18 September 2025). Can We Grow Without Fracturing? Australia’s Migration Test. https://www.theepochtimes.com/world/can-we-grow-without-fracturing-australias-migration-test-591227
8. North Sydney Sun (18 September 2025). New 14 storey building could neighbour Crows Nest’s five ways redevelopment. https://northsydneysun.com.au/business-property/new-14-storey-building-could-neighbour-crows-nests-five-ways-redevelopment/
9. The Indian Sun | by The Indian Sun 18 September 2025, 9:03am AEST. (18 September 2025). NSW Opposition signals support for housing reform talks. https://www.theindiansun.com.au/2025/09/18/nsw-opposition-signals-support-for-housing-reform-talks/
10. Real Estate | by Kaylee Cranley (18 September 2025). Property experts warn of ‘bandaid fix’ home guarantee scheme. https://www.realestate.com.au/news/property-experts-warn-of-bandaid-fix-home-guarantee-scheme/?cspt=1758673897|8c4caa708c1b07f8420a8a8f0f01c960
11. Mortgage Professional Australia (18 September 2025). Construction costs put brakes on apartment sector. https://www.mpamag.com/au/news/general/construction-costs-put-brakes-on-apartment-sector/550085
12. The Urban Developer | by Clare Burnett (23 September 2025). NSW $1bn Off-the-Plan Fast-Track Scheme Moves Ahead. https://www.theurbandeveloper.com/articles/nsw-presale-finance-guarantee-program
13. The Urban Developer | by Clare Burnett (23 September 2025). Time & Place Plots Potts Point Affordable Pathway Pivot. https://www.theurbandeveloper.com/articles/time-place-potts-point-macleay-street-state-significant-affordable-housing
14. By William Farrington (23 September 2025). NSW Investor loans outpacing owner-occupier mortgages by 600%. https://www.mpamag.com/au/mortgage-industry/market-updates/nsw-investor-loans-outpacing-owner-occupier-mortgages-by-600/550545
15. By Mathew Williams (24 September 2025). $1bn guarantee gives NSW developers the edge. https://www.smartpropertyinvestment.com.au/investor-strategy/27048-1bn-guarantee-gives-nsw-developers-the-edge
16. (23 September 2025). Modular building wins 10K prize for design innovation. https://architectureau.com/articles/Modular-building-wins-10K-prize-for-design-innovation/
17. By Mathew Williams (24 September 2025). $1bn guarantee puts NSW developers in the fast lane. https://www.brokerdaily.au/economy/20855-builders-rejoice-1bn-guarantee-puts-nsw-developers-in-the-fast-lane
18. WA Today | by Cindy Yin  (22 September 2025). Residents furious at plans to build 30,000 homes in Sydney’s inner west. https://www.watoday.com.au/national/nsw/residents-furious-at-plans-to-build-30-000-homes-in-sydney-s-inner-west-20250919-p5mwe2.html
19. By Owen Raymond (24 September 2025). NSW Govt buying up homes to ease housing crisis. https://www.news.com.au/finance/real-estate/nsw-govt-buying-up-homes-to-ease-housing-crisis/news-story/bb2357a6b7fb59c41108ac6c66f30a5a?btr=c94f54512066558237a9a8616e7768bb
20. Real Estate Business | by Mathew Williams (22 September 2025). Builders rejoice: $1bn guarantee puts NSW developers in the fast lane. https://www.realestatebusiness.com.au/industry/30661-builders-rejoice-1b-guarantee-puts-nsw-developers-in-the-fast-lane
21. NT News | by Alex Blair  (22 September 2025). Government’s first homebuyer scheme will create its own problems, RBA warns. https://www.ntnews.com.au/business/economy/governments-first-homebuyer-scheme-will-create-its-own-problems-rba-warns/news-story/490078c4957d91f763ba51da9c48b006?btr=b9549aecbcafc4f8cad68514de62a10d
22. By Owen Raymond, Property journalist (24 September 2025). NSW Govt buying up homes to ease housing crisis. https://www.realestate.com.au/news/nsw-govt-buying-up-homes-to-ease-housing-crisis/?cspt=1758672662|609c2a1c3d25f40ad0f43f8f67dd248c
23. By James Gruber. (n.d.). A nation of landlords and fund managers. https://www.morningstar.com.au/personal-finance/nation-landlords-fund-managers
24. Australian Bureau of Statistics | 18 September 2025. National, state and territory population. https://www.abs.gov.au/statistics/people/population/national-state-and-territory-population/latest-release