NSW Budget ‘Groundbreaking’ $1bn Guarantee to Unlock Housing

The NSW Government has unveiled a groundbreaking $1-billion Presale Finance Guarantee scheme as the centrepiece of its 2025-26 Budget, designed to unlock finance barriers that have prevented viable housing projects from proceeding. Under the Australian-first guarantee scheme, the state would back presales for up to 5000 apartments through a revolving fund to help developers secure finance for an estimated 15,000 new homes over five years. NSW planning minister Paul Scully says meeting presale requirements has been “the most common issue cited by industry in beginning construction”. “The new Presale Finance Guarantee seeks to secure finance approvals faster, speed up the commencement of construction, and lower the risk and cost of debt for the residential sector to deliver more homes,” Scully tells The Urban Developer . “This is the first time this has been done in Australia and is the largest program of its kind in the world.” It joins previously announced measures including permanent tax concessions for build-to-rent developments and streamlined infrastructure guidelines to accelerate housing supply across the state. “The message to the industry is build, build, build,” Scully says. The Budget also confirmed the indefinite extension of the 50 per cent land-tax concession for eligible build-to-rent housing developments, replacing the previous 2039 expiry date set by the former government. The Government describes the build-to-rent concession as “the most generous tax incentive of its kind in the country” and expects it will support construction of more high-quality rental housing. ▲ NSW Minister for Planning and Public Spaces Paul Scully. Presale guarantee mechanics The guarantee addresses the growing difficulty developers face in meeting presale requirements, which the NSW Productivity and Equality Commission identified as a key hurdle in its housing supply review. Presale thresholds required by lenders have increased from 50 per cent to 80 per cent of homes in some cases over recent years, causing projects to remain on hold for months or years while developers secure sufficient off-the-plan sales. Under the scheme, the government would act as guarantor on up to 50 per cent of presales for approved housing projects, providing $5 million to $50 million in guarantees per project. Developers and projects would be assessed on credibility, capability and capacity, and “developers will be expected to begin construction within six months of signing their agreement or the guarantee will be extinguished”, Scully says. If homes remain unsold after completion, developers can “call” on the guarantee and the government will buy them at a discounted rate, with these homes potentially sold, rented or retained as affordable or social housing. The scheme is expected to start accepting applications by the end of 2025. Urbis chief economist Richard Gibbs says the guarantee scheme would particularly benefit high-density developments where presales are typically required for finance. “I think it’s a good move and it’s actually going to favour high density because that’s where you have the biggest emphasis on presales being contingent upon developer finance,” he tells The Urban Developer . “I don’t think it’s going to have a lot of impact on greenfield low density because typically they’re not sold off the plan. “The higher-density developments are, and that’s really what it’s designed to do. So again, it goes back to the transport-oriented developments and the high-density residential in those areas and communities.” ▲ Urbis chief economist Richard Gibbs. Works-in-kind guidelines accelerate infrastructure The state also released draft Works-in-Kind Guidelines designed to accelerate housing and infrastructure delivery. Under the framework, developers can provide land or construct infrastructure projects instead of paying Housing and Productivity Contributions. Gibbs says the works-in-kind arrangements addresses a major impediment to new housing supply, noting councils are sitting on more than $3.8 billion in infrastructure contributions. “It’s not because councils don’t want to spend it, it’s because they don’t have the resources to be able to get the contractors to do that work,” he says. “It makes sense that you allow developers when they’re developing communities and precincts to contribute that work up front at the same time as the housing. So, it’s a positive move.” Workforce development and delivery challenges Construction workforce development received substantial investment, with $40.2 million allocated over two years for up to 90,000 fee-free apprenticeships and traineeships at TAFE NSW and Smart and Skilled training providers, including 23,000 additional construction apprenticeships covering trades including plumbing, carpentry and electrotechnology. A further $13.8-million Construction Workforce Package would upskill 4800 workers into residential construction roles. But Gibbs warns that delivery would be the biggest challenge, noting ongoing competition for resources with major infrastructure projects and highlights the need for federal action on skilled migration visas, arguing domestic apprenticeship programs alone will not provide sufficient skilled labour. “There’s no way through even the free apprenticeship training system that we will get enough skilled labour domestically in the housing construction sector to deliver,” Gibbs says. ▲ Gibbs says skilled labour shortages still threaten housing delivery targets. Planning system improvements The Budget allocated $122 million for planning system improvements. These included $83.4 million for additional planning resources to accelerate approvals, $10.6 million for the Housing Delivery Authority’s continued operations, and $7.6 million to continue the government’s land audit program, which has identified sites with potential for more than 8200 well-located homes. Planning approvals are already 17 per cent faster than March 2023, with building applications up 28 per cent on the previous year. The Housing Delivery Authority has streamlined approvals for 53,500 homes across 136 residential projects since beginning operations in January. Industry response The Property Council of Australia welcomed the announcements, with NSW executive director Katie Stevenson describing the guarantee as “a real breakthrough” and “a world-leading solution”. Stevenson said it addressed the growing difficulty developers faced in meeting presale thresholds, particularly as the state works towards its National Housing Accord target of 377,000 new homes by 2029. The Urban Taskforce Australia chief executive Tom Forrest says there are “promising signs” the Government was focused on addressing housing supply. The organisation welcomed the Investment Delivery Authority establishment, modelled on the Housing Delivery Authority to accelerate approvals for up to 30 major projects across industries. Developer strategy recommendations Urbis chief economist Richard Gibbs says developers should prioritise transport-oriented developments and mixed-use projects to take advantage of the policy changes. “I think in New South Wales, it’s certainly the transport-oriented developments, the mixed-use developments, because there is a desire to get greater density rather than urban sprawl,” he says. Rosehill collapse creates housing target challenge The completion data shows the challenge ahead, with housing completions declining in 2024 compared with 2023 despite the state needing more than 75,000 new homes a year to meet National Housing Accord targets. The challenge has been compounded by the collapse of the $5.3 billion Rosehill racecourse deal, which Gibbs described as a “major missed opportunity” that would have delivered 25,000 homes. ▲ The Australian Turf Club-owned Rosehill Racecourse in Western Sydney which will no longer be sold to the NSW government. Gibbs sees a clear alternative in Homebush Bay, arguing it represents a “much more efficient and effective way of achieving those targets”. “There is land there, there’s lots of land there. The infrastructure investment has already been made and, frankly, we need to get a very good return on investment at this point,” Gibbs says. While Premier Chris Minns has indicated alternative “Plan B” proposals closer to the Sydney CBD are under consideration, Gibbs says the focus should shift from seeking “one silver bullet in a mega development” but acknowledges that large-scale developments may still be necessary to meet the 2029 housing targets. “I think the key in all of the housing initiatives is going to be getting momentum on many fronts rather than looking for some mega-delivery projects because by definition those projects are going to take some years to deliver the quantum of housing,” he says. “We need to increase the completions on a broad number of fronts, not just through greater Sydney, but also the regions in New South Wales.”

NSW Budget ‘Groundbreaking’ $1bn Guarantee to Unlock Housing

Get the full story.

Capital Resets as Scarcity Cycle Approaches Peak in 2026

Fears Red Tape Will Derail Melbourne Metro as Development Engine

Realising Upside: Skyhold Doubles Money in Shrewd Site Deal

Bringing Life Back Upstairs in Adelaide’s Empty Heritage Buildings

Finding the New Normal: What Build Costs Will Do in 2026

Melbourne Long Lunch | Panel discussion with Tim Price, Jeremy McLeod, Katya Crema & Anne Michaels

A fireside chat with Troy Daffy | Managing Director, Silverstone Developments

Brisbane Long Lunch | Panel discussion with Rob Comiskey, Frank Licastro, Steve Laffey & Alexandra Stuart-Robertson

Sydney Long Lunch | Panel discussion with Jamie Durie, Jennifer Macquarie & Michael Romano

Uniting Approved for $500m Waverley Seniors Project

C Capital Plots Aussie Debut with $4.5bn Vic Logistics Play

Mapletree Offloads Mac Park Office Block for $101m

Racing Billionaire Pushes Ahead with SEQ Masterplan

2026 Developer Outlook Lunch | Melbourne

2026 Developer Outlook Lunch | Brisbane

2026 Developer Outlook Lunch | Sydney