The Pulse | 5 November 2025

Tug of War: NSW’s Battle Between Housing Supply and Demand

The NSW construction landscape is defined by a significant policy paradox. 

While the state government continues to pursue a strong supply-side agenda through planning reforms, rezoning initiatives and innovative procurement models, these efforts are colliding with federal demand-side stimulus that is supercharging the property market [12, 13, 16]. 

The expansion of the first-home buyer deposit guarantee scheme has ignited buyer demand, pushing Sydney’s median house price to a record high of over $1.6 million, further intensifying affordability pressures [26, 28].

In response to supply challenges, housing approvals in NSW have risen past 50,000 for the first time since 2023, supported by an increase in apartment construction [25]. However, this momentum is tempered by persistent builder profitability constraints, which experts suggest may blunt the impact of planning reforms [13, 27].

Amid this heated market, regulatory oversight remains firm, with the NSW Building Commission continuing to investigate builders over defects and delays, reminding the industry that delivery and quality are paramount [9, 15].

The Policy Paradox: Supply Reforms Meet Demand-Side Momentum

The NSW Government is advancing a coordinated strategy to accelerate housing supply, though its impact is being reshaped by broader market conditions.

Current state-led initiatives include the finalisation of Transport Oriented Development precincts in areas such as North Wollongong, unlocking more than 5,300 homes [17, 24], along with major rezonings in Shellharbour and Gosford that will enable a further 7,600 dwellings [11]. These measures form part of a wider effort to streamline approvals, reflected in a 30.4 percent increase in construction approvals in September and a pipeline exceeding 75,000 homes currently under construction [25].

However, this supply-side expansion is occurring within a market heavily influenced by federal policy settings. The widening of the first home buyer deposit guarantee scheme has been identified as a key driver behind the strongest national property price growth in more than two years [13, 18, 19, 27]. Sydney’s median house price has now reached $1.62 million [26].

The underlying problem remains structural: demand, sustained by government incentives and interest rate adjustments, continues to outpace available housing supply [13, 26]. Analysts caution that state planning reforms alone are unlikely to resolve the imbalance, given the persistent cost and margin pressures facing builders. Without targeted industry incentives, the gap between approvals and completions is likely to remain [13, 27].

Unlocking the Pipeline: New Procurement Models and Major Projects

Amid the complex policy environment, tangible development opportunities are emerging, supported by new government procurement models and steady private sector confidence. Homes NSW is reshaping traditional public-private partnerships through its “developer-led” approach for mixed-tenure projects in Pagewood, Hillsdale and Sylvania [2, 6]. Under this model, the government funds the social housing component directly and defers land payments for the market housing portion. This structure reduces upfront risk for private partners and enables faster project mobilisation without reliance on presales [2].

Market confidence in the high-rise sector remains steady, evidenced by major proposals such as Stockland’s 52-storey, 507-apartment tower in St Leonards [7] and Deicorp’s approved 17-storey project in Macquarie Park [21].

The pipeline is being boosted by major transport-linked projects and targeted regional investment. This includes the $200.1 million Key Health Worker Accommodation Program, which recently advanced with the appointment of a builder for 30 modular units in Dubbo [3].

Navigating Risk: Regulatory Enforcement and Delivery Headwinds

While opportunities remain strong, ongoing risks around project quality, delivery and planning continue to shape project outcomes. A clear example is the abandoned 24-storey residential tower in Parramatta, where serious defects identified in 2022 led to a Prohibition Order and the developer’s subsequent administration. The project has since become emblematic of systemic failures in quality assurance, regulatory oversight and financial governance across parts of the sector [9].

This issue has heightened regulatory scrutiny across the sector. In a separate matter, the NSW Building Commission has launched a formal investigation into Tamworth-based Bramwell Homes following consumer complaints concerning defects, delays and incomplete work [15]. The investigation highlights the Commission’s proactive approach and the reputational and commercial consequences for builders that fail to meet required standards.

Delivery uncertainty also extends to major public infrastructure, with the Minns Government facing criticism over alleged delays to the Sydney Metro’s Sydenham-to-Bankstown line, now reportedly pushed to September 2026 [20]. Such delays create commercial uncertainty for contractors and the broader supply chain.

At the local level, planning risk remains a key challenge. The use of the State Significant Development pathway for a mid-rise project in Mona Vale, bypassing local council controls, has triggered strong community opposition, highlighting the ongoing balance between state-mandated density targets and local planning sentiment [8].

Final Thoughts 

The NSW construction sector remains finely balanced between a government-driven surge in housing supply and market conditions that continue to test affordability and delivery. Rising approvals point to renewed industry confidence, but the true measure of success lies in translating this momentum into delivered, compliant and high-quality homes.

Developers that can navigate new planning incentives and affordable housing mandates are best placed to capture opportunity. At the same time, heightened regulatory scrutiny around defects and delivery delays is a clear reminder that growth without quality is unsustainable. For industry professionals, success now depends on understanding both policy complexity and performance discipline in an environment defined by demand, regulation and risk.

1. The Post Sydney | by Claudia Butjerevic (1 November 2025). Chatswood Metro Site to Deliver 1500 New Homes. https://thepost.sydney/chatswood-metro-site-to-deliver-1500-new-homes-2/
2. The Urban Developer | by Partner Content. (Date unavailable). Developer-Led Model Fast-Tracks Sydney Mixed-Tenure Housing. https://www.theurbandeveloper.com/articles/developer-led-model-fast-tracks-sydney-mixed-tenure-housing
3. Ambulance Service of NSW. (31 October 2025). Builder appointed to deliver new Dubbo Key Health Worker Accommodation. https://www.ambulance.nsw.gov.au/news/news-items/builder-appointed-to-deliver-new-dubbo-key-health-worker-accommodation
4. The Urban Developer | by Clare Burnett. (Date unavailable). Housing, Hospitality Focus of Bondi Junction Masterplan. https://www.theurbandeveloper.com/articles/bondi-junction-waverley-council-vision-housing-night-time-economy-masterplan
5. TimeOut Sydney | by Sangeeta Kocharekar (30 October 2025). Sydney's Inner West is getting 30,000 new affordable homes. https://www.timeout.com/sydney/news/sydneys-inner-west-is-getting-30-000-new-affordable-homes-103025
6. Inside Construction | by Ashley Grogan (30 October 2025). Developers and builders sought for Sydney housing projects. https://www.insideconstruction.com.au/news/latest-news/developers-and-builders-sought-for-sydney-housing-projects/
7. Daily Telegraph - North Shore Times | by Tileah Dobson (30 October 2025). 601 Pacific Highway, St Leonards: Plans for 507 apartments in a 52-storey tower revealed. https://www.dailytelegraph.com.au/newslocal/north-shore/601-pacific-highway-st-leonards-plans-for-507-apartments-in-a-52storey-tower-revealed/news-story/7d06334b6bbe696a19cc3e3ad1866ce7?btr=c3e2194a714ecd49229753faccfc619d
8. Northern Beaches Advocate | 30 October 2025, 9:10am AEDT. (30 October 2025). Mid-rise development begins. https://www.northernbeachesadvocate.com.au/2025/10/30/mid-rise-development-begins/
9. News.com.au | by Owen Raymond (4 November 2025). $2.8bn loss: Eerie ghost tower ‘simply abandoned’. https://www.news.com.au/finance/real-estate/sydney-nsw/28bn-loss-eerie-ghost-tower-simply-abandoned/news-story/e1fd3314049eb7a11399c7cb3bfb789e?btr=18b7660678c79f8c8410880a971ac42c
10. Build Australia (4 November 2025). Sydney advances design-led growth for Pyrmont. https://www.buildaustralia.com.au/news_article/sydney-advances-design-led-growth-for-pyrmont/
11. The Urban Developer | by Patrick Lau (4 November 2025). Shellharbour, Gosford Rezonings Target 7600 Homes. https://www.theurbandeveloper.com/articles/shellharbour-gosford-rezonings-target-7600-home-yield
12. By Tom Crowley (3 November 2025). O'Neil welcomes housing progress despite price surge, while Bragg says no to 'NIMBYs'. https://www.abc.net.au/news/2025-11-03/oneil-welcomes-housing-progress-liberal-vows-to-ditch-nimby/105967310
13. InDaily Queensland | by Jacob,Shteyman (3 November 2025). Property prices charge up amid buyer rush. https://www.indailyqld.com.au/news/just-in/2025/11/03/property-prices-australia
14. North Sydney Sun (3 November 2025). State Government order sparks improved Council DA approval times. https://northsydneysun.com.au/community-politics/state-government-order-sparks-improved-council-da-approval-times/
15. The Inverell Times | by Emma Downey (5 November 2025). NSW Building Commission launches probe into major Tamworth home builder. https://www.inverelltimes.com.au/story/9072723/nsw-building-commission-launches-probe-into-bramwell-homes/
16. Spectator Australia | by Toby Carrodus (3 November 2025). Australia’s housing crisis is failure by design. https://www.spectator.com.au/2025/11/australias-housing-crisis-is-failure-by-design/
17. Southern Highland News | by Glen Humphries (3 November 2025). Ten-storey apartments in North Wollongong get the tick under new planning rules. https://www.southernhighlandnews.com.au/story/9102767/new-apartment-towers-planned-for-north-wollongong/
18. The Daily Mail | by Jacob Shteyman (3 November 2025). How Anthony Albanese's first-home buyer scheme has backfired. https://www.dailymail.co.uk/news/article-15251309/How-Anthony-Albaneses-home-buyer-scheme-backfired-prices-soar-fastest-rate-two-years.html
19. The Daily Mail | by Australian Associated 3 November 2025). Home prices turbocharged as deposit guarantee kicks in. https://www.dailymail.co.uk/wires/aap/article-15251029/Home-prices-turbocharged-deposit-guarantee-kicks-in.html
20. Liberal Party of New South Wales (3 November 2025). All aboard the NSW Labor delay express. https://nswliberal.org.au/chris-rath/news/all-aboard-the-nsw-labor-delay-express
21. Architecture and Design (3 November 2025). Deicorp secures development approval for DKO-designed Macquarie Park residential project. https://www.architectureanddesign.com.au/editorial/industry-news/deicorp-secures-development-approval-for-dko-designed-macquarie-park-residential-project
22. The Urban Developer | by Clare Burnett (3 November 2025). Rebel Resets 227-Apartment Plans at Woolloomooloo. https://www.theurbandeveloper.com/articles/rebel-property-woolloomooloo-sydney-apartment-housing-approvals-abs
23. NSW Government (3 November 2025). Minns Government on track for another record year of public housing builds. https://www.nsw.gov.au/departments-and-agencies/homes-nsw/news/minns-government-on-track-for-another-record-year-of-public-housing-builds
24. NSW Government (3 November 2025). New homes for North Wollongong Station Precinct. https://www.nsw.gov.au/ministerial-releases/new-homes-for-north-wollongong-station-precinct
25. Paul Scully (3 November 2025). Growing pipeline of housing approvals in NSW. https://paulscullymp.com.au/news/media-releases/growing-pipeline-of-housing-approvals-in-nsw/
26. News.com.au | by Aidan Devine (3 November 2025). Revealed: Sydney house prices soar to new record high. https://www.news.com.au/finance/real-estate/revealed-sydney-house-prices-soar-to-new-record-high/news-story/d87fd2b30634bc79e1f603d688413199?btr=618a474bd2f50ce52e3de57b42f51ed0
27. PerthNow (2 November 2025). Home prices skyrocket around Australia as Albanese government’s deposit guarantee scheme kicks in. https://www.perthnow.com.au/news/home-prices-skyrocket-around-australia-as-albanese-governments-deposit-guarantee-scheme-kicks-in-c-20554514
28. ABC News | by Isabella Higgins, Rhiannon Hobbins (2 November 2025). Australians are being priced out of the property market and first home buyers schemes might not be helping. https://www.abc.net.au/news/2025-11-02/real-estate-property-market-first-home-buyers-schemes/105941822