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The NSW Government's Housing Affordability Package Explained

Consistent with the NSW Premier, Gladys Berejiklian’s promise to make housing affordability the highest priority for the state, she recently announced the target of delivering 61,000 new homes every year through to 2020-21.

To achieve this goal and address what the Minister for Planning has referred to as an affordability crisis in Sydney, the NSW Government has developed a package of measures. The package is centred on three initiatives:

  • Helping first home buyers enter the market
  • Boosting supply of new homes
  • Delivering infrastructure to support growth

The NSW Government is riding on the back of unprecedented demand and good conditions for private sector investment in new housing. These reforms are intended to maintain high rates of supply, and to assist local buyers to enter the market, so that the demand for at least 725,000 new homes over the next 20 years can be met.

We’ve all seen the media coverage on the first home buyer and investor changes, so here we focus on the measures to boost supply and deliver more infrastructure where it’s needed.

NEW PRIORITY PRECINCTS

The most significant initiative to boost housing supply is the declaration of 15 new Priority Precincts across Sydney.  Priority Precincts are locations where new transport infrastructure or government land are a catalyst to boost the supply of new homes, jobs and services. The process to rezone land is led by the Department of Planning in partnership with Councils and infrastructure agencies.

The new Priority Precincts are spread across the metropolitan area, along key transport corridors including Sydney Metro Northwest, City and South, the Western Line, East Hills Line, and in the South West and North West Priority Growth Areas.  Frenchs Forest has also been identified as a Priority Precinct, to coordinate planning and delivery around the Northern Beaches Hospital. The Anzac Parade Corridor has also been resurrected.

Many of the Priority Precincts feature substantial areas of government owned land, including surplus rail corridor land and public housing estates.

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Preliminary information is available on the Department’s web site: http://www.planning.nsw.gov.au/News/2017/New-priority-precincts More details will emerge as planning progresses in these precincts.

OTHER HOUSING SUPPLY INITIATIVES

The Government also wants to facilitate smaller, smarter homes in appropriate locations.  Landcom will play an active role in bringing new housing typologies to market. The ‘Missing Middle’ reforms for medium density housing will be finalised to encourage good design and enable more diverse housing types to be approved as complying development. Smaller apartment sizes will also be explored to reduce construction costs.

Financial assistance will be given to ten priority Councils to update their Local Environmental Plans to include new housing targets. Incentive payments will be available to another five Councils who voluntarily update their local plans. Other measures to improve the capacity of Councils to meet the housing supply challenge include:

  • A new team in the Department of Planning to assist Councils to accelerate rezonings that will promote increased supply.
  • Simplifying complying development in greenfield areas through a new Greenfield Complying Development Code (a draft was released in May this year).
  • An Office of Housing Coordinator, and district case managers to work with Councils and developers to remove impediments to supply.
  • Independent Hearing and Assessment Panels to make decisions on major development applications.

INFRASTRUCTURE TO SUPPORT GROWTH

Funding by Government for new infrastructure to support growth will be increased and targeted for priority growth areas. The Housing Acceleration Fund, which has for some years been delivering essential enabling infrastructure, gets a $600 million boost.  Another $1billion in funding will be directed to infrastructure in priority precincts.

Private sector infrastructure funding mechanisms are going to be shaken up, and the Government expects the development industry (and therefore new home buyers) to contribute more.  These are significant reforms, and are likely to have flow on effects for the costs of development.  While transitional arrangements will assist, increased costs at a time when the market is showing signs of softening may place pressure on affordability and feasibility.

Local infrastructure contributions have for some years been capped at $20,000 in infill areas and $30,000 in greenfield areas, with the NSW Government providing top up funding through the Local Infrastructure Growth Scheme. The Contributions caps will be progressively increased then phased out (along with the LIGS funding) after three years, meaning the development industry will fund the full costs of local infrastructure identified in Council contributions plans.  IPART will continue to have a role in reviewing contributions plans to ensure costs are reasonable.

Special Infrastructure Contributions (SIC), used to fund state infrastructure, will be expanded to ten new areas.  The locations are yet to be nominated, but we anticipate they will closely correlate to the new priority precincts.  The existing Western Sydney Growth Areas SIC, which applies to the North West and South West Priority Growth Areas, has also been flagged for review as part of new Land Use and Infrastructure Implementation Plans like the recently released draft for the North West Priority Growth Area

 

For any inquiries, please contact Paul Robilliard on +61 2 9956 6962 or PRobilliard@jbaurban.com.au