These changes promised to deliver 100,000 homes in NSW. Fourteen months later, they’re still not here

Pressure is building on the NSW government to finalise the second stage of its controversial medium-density housing reforms, signalled more than a year ago, as development industry groups warn uncertainty over the policy is stalling the delivery of thousands of new homes.

The Minns government announced its “missing middle” policy to encourage construction of low- to mid-rise housing in November 2023 as part of a push to increase density in established suburbs.

The government wants to build more terraces and small apartment blocks throughout greater Sydney and surrounds.Credit: Sam Mooy

It said the scheme would create the capacity to deliver more than 112,000 homes: 30 per cent of its National Housing Accord target of 377,000 new dwellings by mid-2029.

The first stage of the policy, which enabled the construction of dual occupancies and semi-detached dwellings across most of NSW, came into effect in July. But the second stage – allowing more terraces, townhouses and small apartment blocks near transport hubs and town centres – was delayed until after last September’s local council elections. The government indicated the changes would commence later in 2024.

Urban Development Institute of Australia chief executive Stuart Ayres said of the 14-month delay: “The heavy lifter of housing reform is now looking more like a handbrake on new housing.”

Under the government’s plans, apartment blocks of up to six storeys would be allowed within an 800-metre radius of train stations and town centres. However, the policy, which is expected to trigger local opposition in some areas, will probably be scaled back, the Herald revealed in December.

Property Council NSW executive director Katie Stevenson said the reforms were essential to delivering more diverse housing choices in well-located areas close to transport and amenities. Analysis from the council suggests each month of delay jeopardises the potential construction of 2240 to 4000 dwellings – enough homes to fill a suburb the size of Arncliffe, Thirroul or Mayfield.

“These reforms are what’s needed to tackle NSW’s housing shortfall, but the longer they remain stalled, the harder it will be to meet the state’s … commitment of 377,000 new homes by 2029,” she said.

Stevenson said at least 17,920 new dwellings would be on track for development if the second stage of the scheme had been activated from July last year, assuming a 10-month construction period.

“With a longer 18- to 32-month construction timeline, this number rises to 21,333 to 32,000 homes at risk of missing the target,” she said.

Planning and Public Spaces Minister Paul Scully said the second stage of the reforms were being finalised.Credit: Rhett Wyman

“The government says these reforms have the potential to unlock 112,000 new homes ... but without immediate action, that opportunity will quickly slip away.”

Planning and Public Spaces Minister Paul Scully said the government was committed to low- and mid-rise housing reform, and the next stage of the policy was currently being finalised.

He would not be drawn on when the second tranche of reforms would be introduced.

“We have already brought in changes that reintroduce dual occupancies and semi-detached dwellings across NSW, as well as the largest planning reforms in generations,” Scully said.

Ayres said the lack of certainty meant vendors were not selling their sites because “nobody knows what finalised density and floor space requirements the final policy will allow on their land”.

“Communities have been waiting more than 14 months for the final policy while both potential and existing development sites sit idle, further constraining delivery in the middle of a housing supply crisis,” he said.

North Sydney Council Mayor Zoe Baker said weaknesses in the construction sector were also hampering the delivery of new homes.

“Rezoning is the easiest part because it’s effectively colouring in on a map. The hardest part is delivering new homes across the public and private sectors,” she said.

Baker said councils were awaiting further details of the medium-density changes, including how the reforms would define “town centres” and to what extent they would take heritage into account.

She said if councils had been tasked with enabling more medium-density housing within their areas when the government first raised the reforms, those plans would probably “already be in place”.

“I think we could end up with a large, one-size-fits-all blanket rezoning from Wollongong to Newcastle that won’t result in any practical completion of new dwellings in the next five years.”

On Wednesday, NSW Building Commissioner James Sherrard, who started in the role in December, told a roomful of developers at a Property Council NSW event in Sydney there was unmet demand for medium-density housing.

The problem, he said, was that the step up from constructing class-one buildings (single-storey or terraces) to constructing class-two buildings (apartments) was “a gigantic one for builders” because the requirements for design, approvals and construction quality were “fundamentally different”.

“We need to better educate and help our class-one builders to make that step up to class two because that’s where we’re going to need them,” he said.

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