[+] What the NSW Budget Means for Property Sector

Housing, planning and infrastructure were always going to be key features of NSW premier Chris Minns’ first Budget—and while it has been welcomed in some quarters, others say it has not gone far enough. 

During the past few years, the planning process and issues with trunk infrastructure has prompted policies and reforms to streamline processes. This Budget aims to do the same.

And while NSW treasurer Daniel Mookhey may have delivered a Budget with some hard choices in it, it is now up to planning minister Paul Scully and the Labor goverment to push through those reforms.

The Urban Developer breaks down what the funding and policy decisions will mean for developers working in the state that is often named as the most expensive in Australia to call home.
 

Housing

The first piece of big news is the $224 million set aside for a Government Essential Housing Package.

This will include $70 million in debt financing for homes in regional NSW and $35.3 million for housing services for Aboriginal and Torres Strait Islander people via Services Our Way.

There will be $35 million put aside for critical and necessary social housing maintenance and $20 million within Restart NSW set aside for dedicated mental health housing.

The NSW Housing fund will get $15 million for urgent priority and homelessness housing with $11.3 million to extend the Together Home program. 

Temporary housing and accommodation will also get a boost with $10.5 million allocated to the Community Housing Leasing Program and $10 million for Modular Housing Trial, while  $5.9 million will be provided for urgent specialist homelessness services. 

But Urban Taskforce chief executive Tom Forrest sees a problem.

“There is no new incentive in this Budget for the private sector to increase housing supply,” Forrest said.

“The private sector delivers over 95 per cent of the new housing (both rental and homes for sale).

“The disproportionate focus on social and affordable housing is a symptom of the government throwing Band-Aids on the housing supply crisis rather than taking bold steps to solve the problem.”

There will also be a new NSW Rental Commissioner and a portable rental bond scheme introduced while a commitment to working on protecting tenants from eviction and allowing pets was also announced. 

Where the money will come from for these measures is a key concern for developers who will need to now provide $1.5 billion through changes to infrastructure contributions. 

“The $2.2-billion housing and infrastructure plan is largely funded from a tax on the supply of new homes,” Forrest said.

“[The] $1.5 billion of the revenue to support this package comes from the new Housing Productivity Contribution.”

Meanwhile, property investors will now need a 25 per cent stake in a property before they can claim land tax exemptions for a property as their primary place of residence. There are also tax changes for private unit trusts to prevent them being used for tax minimisation.

▲ This Budget is the first under Chris Minns as NSW premier.

Planning

Planning reform has long been on NSW Labor’s agenda and it featured heavily in the run-up to the election.

A Faster Planning Program with $38.7 million in funding was announced with $24 million set aside for a NSW Building Commission, which will be tasked with protecting buyers and ensuring housing quality.

In a bid to free up more land for housing, $9.1 million has been allocated to assessing new opportunities for housing on government-owned land.

AI or artificial intelligence also got a mention with a proposal to use it to help speed up the planning system as well as more efficient. 

The Budget has allocated $5.6 million to this policy, which was a recent request in the Property Council’s Housing Outcomes report, according to NSW executive director Katie Stevenson.

“Increased funding for social and affordable housing and investigating the use of artificial intelligence to make the planning system more efficient were key reform asks from our recent Housing Outcomes report, so we particularly welcome their inclusion as part of the government’s first Budget,” Stevenson said.

But she highlighted a key issue that has dogged the state’s planning system consistently—trunk infrastructure, particularly in greenfield and regional areas.

“There is an enormous difference between land that is simply rezoned and land that is ‘development ready’—the missing ingredient is enabling infrastructure such as water, roads and transport,” Stevenson said.

Stevenson also wanted to see more done within the CBD.

“While the focus on housing and infrastructure is welcomed, industry will be disappointed that the NSW government has not delivered a funding boost for CBD activation in this Budget,” she said. 

“Our cities are the major economic engines of our state and while the $26-million investment in expanding the work of the Office of the 24 Hour Economy Commissioner is welcome, a large-scale funded program to turbocharge CBD revitalisation is needed.”

Other reforms announced included redirecting resources from the Greater Cities Commission and the Western Parkland City Authority.

It does not deliver on all election promises with development rules around train stations and new housing targets for local councils and Sydney regions still yet to be announced. 

“The Budget’s commitment to an overhaul of the Greater Cities Commission and the Western Parkland City Authority, with a focus on redirecting resources to deliver housing approvals, is welcome,” Forrest said.

“But this is just the start and much more is needed to restore private sector confidence and for housing supply to begin to rise.” 

▲ NSW planning minister Paul Scully will now be responsible for delivering several promised reforms to make the state planning system more efficient.

Infrastructure

The state government’s aim is to move population growth around key infrastructure and to get more high density closer to central Sydney.

But the NSW Fast Rail has been one of the key infrastructure projects that has been nipped in the bud in the interest of saving $2.5 billion. 

This means that there will be no work done on fast-rail connections, including no Great Western Highway duplication, no new Dungowan Dam or pipeline augmentation and no wall raising for the Wyangala Dam.

What it then does provide is part of the combined $2.2 billion for housing and infrastructure in the 2023-2024 state budget.

Landcom will get $300 million of that for building 4700 new homes, of which 30 per cent have to be affordable housing in addition to the $60 million it has to develop build-to-rent projects along the northern and southern coasts. 

Restart NSW will get $400 million for a new Housing Infrastructure Fund while the remaining $1.5 billion will be spent on building roads, parks, hospitals and schools to support new homes being built in Sydney, the Lower Hunter, Central Coast and the IllawarraWyangala Dam—all key growth areas.

A new regional rail fleet will cost $1.4 billion while $390 million will be allocated to the Regional Economy Road Repair Fund.

The Regional Roads Fund will get $334 million to build new roads, the Fixing Country Bridges Program $333.9 million and the Fixing Country Rail Program $95.9 million—all key to supporting people wanting to live in regional areas and the developers wanting to build there.

Transitioning to zero emission buses will cost $29.4 million, the Transport Connect Bus Program $20.2 million and improving heavy vehicle rest stops $10 million.

▲ A render of a platform at the proposed Pyrmont Station on the Sydney West Metro line.

Despite the Fast Rail cut, rail has had wins in the Budget with $72.3 billion allocated over four years to transport.

That includes $1 billion to bring the Sydney Metro City and Southwest project back on track and $7.9 billion over four years for the Sydney Metro to Western Sydney Airport line.

This line will have six new stations and connect to Aerotropolis and the new Western Sydney International Airport, which is expecting its first flight in 2026.

The metro line projects have been beleaguered by many delays with worker strikes, bad weather and Covid blamed for cost blowouts. 

Only the Northwest line has been delivered on time and below budget.

A rapid bus network to connect Penrith, Liverpool and Campbelltown to the new international airport will cost $302.7 million and another $300 million will fund upgrading train station carparks and improving accessibility. 

▲ A render of part of the Western Sydney Aerotropolis project.

The Property Council’s Western Sydney director Ross Grove said more could have been done for the region which is the focus of much developer interest.

“Our industry needs a plan from the government to get roads and water infrastructure moving in Mamre Road and the Aerotropolis,” Grove said.

“Our members are ready and able to provide new warehouses, industries and jobs—but they simply can’t get the road capacity to make it happen.

“These areas are a goldmine when it comes to future jobs and productivity and as taxpayers we simply can’t afford to spend $13 billion on building an international airport without also delivering the employment generating activities that are required to make the most of this investment.”

The second stage of the Parramatta Light Rail will also proceed with $200 million allocated to it as will Freshwater Class ferries returning to the Circular Quay to Manly route costing $71.1 million.

There will also be seven new Parramatta River Class ferries costing $43 million.

A new system to inform users of public transport schedules will cost $15.8 million and councils will have access to $60 million for active transport infrastructure such as bike lanes. 

For developers focusing on alternative assets, the Budget allocated $13.8 billion to deliver health facilities across the state including new hospitals.