Red Tape Chokes NSW Planning Policy Progress

More red carpet, not red tape.

Developers say Sydney must cut bureaucratic roadblocks and work with industry to fast-track approvals, rather than bog projects down in delays from referral agencies and restrictive policies.

Industry leaders at The Urban Developer’s Sydney Outlook event on February 27 voiced frustration over lengthy, complex approvals, which they say are adding years to project timelines—sometimes up to seven years—making it harder to meet Sydney’s housing demand.

One of the biggest culprits, according to Perifa managing director Fabrizio Perilli, is the drawn-out process involving key referral agencies such as Sydney Water, Ausgrid and Transport NSW.

“You can’t have a referral agency taking forever to respond to applications,” Perilli said. “Or get a DA that you then have to wait nine months, 12 months, 18 months to actually get things happening on the ground. That’s an absolute joke.”

Developers argue while NSW government initiatives have promised to boost housing supply, slow-moving bureaucratic processes are creating unnecessary roadblocks.

“One of the biggest issues in this country is productivity,” Perilli said. “We’re talking about getting housing built, yet the approval system is fundamentally broken.”

One Global Capital chief executive Iwan Sunito echoed that sentiment, calling for more consultation between government and the development industry before new policies are implemented.

“We need more red carpet, not red tape,” Sunito said. “Talk to us before introducing policies like restrictions on loans to foreign buyers or scrapping stamp duty exemptions for permanent residents under 200 days.

“You’re hurting the economy because they’re not buying.”

High costs stalling Sydney housing

Beyond red tape, Sydney’s housing market continues to face a deeper structural issue—many projects simply don’t stack up financially.

Perilli said rising costs meant projects in Sydney were only viable in high-value areas, such as the Inner West, Eastern Suburbs and Lower North Shore, where apartments can sell for at least $18,000 per square metre.

▲ There is a distinct line on the map between where Sydney project will and will not stack up.

“Everything east of the ‘latte line’ is feasible. Beyond that, it’s a challenge,” he said.

Pirelli said in Sydney’s western suburbs—where demand for affordable housing is highest—projects struggle to move forward due to high construction costs, long approval times and uncertainty around government incentives.

Govt incentives show what’s possible

Despite frustrations, developers pointed to recent policy shifts that have successfully unlocked housing supply.

Traders in Purple director Charles Daoud highlighted the NSW government’s density bonus for affordable housing as a game-changer.

He said in a short period, this one policy lever had led to major developers and community housing providers unlocking thousands of new affordable homes—without any direct government funding.

“We’ve been delivering social affordable housing for 20-odd years now and we’d be lucky if we delivered two or 300 homes,” Daoud said. “And then all of a sudden there’s a little policy lever and there’s thousands of homes that can come online.”

Daoud said it was only through government partnerships and proactive policy-making that developers could meaningfully contribute to solving the affordability crisis.

Sydney falling behind other states

Another key concern is that NSW risks losing investment to states with more efficient planning systems.

Developers pointed to Queensland and Western Australia as examples where approvals are processed faster and with greater certainty.

“I don’t feel that it’s really a crisis just yet,” Perilli said. “Because when it’s a crisis, banks, government, [developers], referral authorities—everyone—would be working together [to answer], ’how do we get housing developed in a shorter period of time?’.

▲ Traders in Purple director Charles Daoud, One Global Capital chief executive Iwan Sunito and Perifa co-founder and managing director Fabrizio Perilli.

“If I look at Macquarie Park 10 years ago, we were completing 200 apartments in three-and-a-half years from buying the site.

“Today, that’s seven. Something’s been lost in the productivity factor.”

Optimism for 2025—if the system catches up

KPMG director of planning and infrastructure economics Terry Rawnsley reinforced the need for urgency, highlighting that Sydney’s housing supply was failing to keep pace with its population growth.

“We’re still seeing Sydney’s population grow at pre-pandemic levels, but the housing pipeline simply isn’t delivering fast enough,” Rawnsley said.

“Unless we see meaningful reform in the approval process, the shortfall will only widen, putting more pressure on affordability.”

Despite the challenges, developers remain cautiously optimistic about the year ahead.

Interest rate cuts and stabilising construction costs are creating better conditions for new projects—but only if the planning system can keep up.

“[Next year] is going to be a busy year,” Sunito said. “We’re busy building hotels, expanding our business. I think we can only get better. Landowners are more realistic now, and that’s fundamental. You don’t make money by building, you make money by buying.”

With the Federal election looming, developers are calling on government leaders to take decisive action—cut the red tape, streamline approvals and deliver policies that support, rather than hinder, new housing supply.