Housing New South Wales

Addressing homelessness and the cost of failing to house people

New South Wales’ housing crisis is real, measurable, and we argue, the result of several policy settings, not just supply. Sydney is the least affordable major city in Australia, and on census night in 2021 well over 100,000 dwellings across Greater Sydney were recorded as unoccupied (ABS, 2022) — while more than 60,000 households sit on the state’s social housing waiting list (Homes NSW, 2025). This reflects a system that rewards speculation and capital gains while people are left without shelter. Tax settings have incentivised holding housing as an asset, prioritising private wealth accumulation over its basic function as a home, and ignoring opportunities for mutual and community wealth building.

The scale of social housing need is equally stark. The state’s peak housing and homelessness bodies have called for around 5,000 new social homes every year for the next decade, yet the Government’s current commitment of 8,400 homes under the Building Homes for NSW program falls well short of this mark (Homes NSW, 2025). Addressing the crisis requires both building new homes and refurbishing ageing public housing estates, ensuring stock remains safe, sustainable, and fit for purpose.

One of the primary purposes of social housing must be to end homelessness, not to administer it. Failing to house people is not a saving. The cost simply moves — to crisis accommodation, hospitals, courts and police — where it is paid over and over again and where it buys nobody a home. Nationally, governments spent $1.8 billion on specialist homelessness services in 2024–25, and those services assisted 288,970 people (Productivity Commission, 2026): a large and recurrent outlay on managing a problem rather than resolving it. New South Wales should therefore set out its housing obligations in legislation the way it sets out its fiscal and emissions obligations — a stated objective that every resident can obtain a safe, secure and affordable home, measurable targets attached to that objective, and a duty on the Government to report publicly against them and explain itself when they are missed. What ultimately matters is not the language governments use about housing, but whether the number of people without a home falls and whether anyone is answerable when it does not.

On census night in 2021 the ABS counted around 35,000 people experiencing homelessness in New South Wales — the largest number of any state (ABS, 2023). The Government’s ten-year NSW Homelessness Strategy, launched in 2025, frames the right ambition — making homelessness rare, brief and not repeated — but its delivery depends on social housing output that current build rates do not approach. Peak bodies including Homelessness NSW put the requirement at around 5,000 new social homes per year over the next decade, several times the annual output currently funded (Homelessness NSW, 2024). By adopting the language of ending homelessness while funding a build program that goes nowhere near eliminating it, governments effectively concede failure from the outset (Kohler, 2023). Admitting this inadequacy and committing to ending homelessness is the only way effective and lasting change will be achieved.

Rising rates of housing stress and homelessness, particularly among women, young people, and older renters, highlight the inadequacy of current measures. Evidence consistently shows that pairing secure housing with wraparound support services offers the most effective pathway out of marginal housing, especially, for survivors of domestic violence (Sullivan et. al., 2023).

Improving Social Housing Pathways for Better Outcomes

New South Wales’ social housing system must be reoriented to support person-centred housing pathways that deliver security, stability and long-term wellbeing. AHURI’s recent inquiry found that while demand for social housing is rising, access has narrowed to only the most acute cases, leaving many vulnerable people stranded on long waitlists or in unsuitable housing (Muir et al., 2025). Application processes can be distressing, and short-term interventions like private rental assistance often fall short – with over half of assisted households unable to sustain their tenancies (Muir et al., 2025). Rather than simply managing transitions between housing types, the system must support individuals based on their lived experiences and goals. With major new investment in supply, there is now an opportunity to reshape social housing as a platform for stability, dignity and opportunity, not just a last resort.

To achieve this, New South Wales should adopt best-practice, person-centred reforms that prioritise housing security and integrated support. AHURI’s research highlights that many tenants face complex challenges and need coordinated services to sustain housing – but trust and success rely on the foundation of a secure home (Muir et al., 2025). Programs like NSW’s Together Home already demonstrate this approach, pairing secure housing for people sleeping rough with co-designed support plans that connect them to health, employment and community services. Strengthening tenancy sustainment mechanisms and offering pathways out of social housing when appropriate – such as through an improved, targeted rental assistance program – can further improve outcomes for tenants while freeing up stock for others in need. These reforms must be backed by co-designed policy, clear entitlements to housing support, and improved system coordination to ensure that social housing offers not just shelter, but a fair and supportive pathway to a better future.

Another important component of this is establishing poverty discrimination laws in New South Wales, to enshrine legal rights of people who are homeless or in transitional housing to attain secure jobs, income support and other vital protections, as identified by legal practitioner Farzana Choudhury, in her 2019 Churchill Fellowship report. This should be paired with a state review (of state laws, policies and delivery partners) of potential regulatory barriers, which are preventing homeless, marginally housed and low-income households from receiving housing and crisis support (including for instance, accounting for intersectional factors like race, culture, sexual orientation and expression) (Choudhury, 2019).

Addressing speculation

The Government’s approach to land banking and speculation to date has been reactive, focusing on piecemeal changes to stamp duty concessions and first home buyer support. New South Wales briefly opened the door to structural reform with the First Home Buyer Choice scheme, which let first home buyers swap stamp duty for a smaller annual property tax — before the scheme was scrapped in 2023 in favour of expanded one-off stamp duty exemptions (NSW Treasury, 2023). Those exemptions reduce the upfront cash required, but they do nothing to discourage speculation or land banking, and unlike some other jurisdictions New South Wales levies no broad vacancy tax on homes deliberately kept empty. For prospective first home buyers, stamp duty has often been seen as a perverse barrier to entry, and concession-led fixes risk simply increasing competition and prices at the margin. The lesson of the short-lived property tax experiment is not that reform is impossible, but that it must be pursued consistently and universally rather than as an optional scheme wound back at the first change of government. As such, abolishing stamp duty outright in favour of a broad-based land tax — with settings that penalise vacancy and land banking — is the mechanism by which home buyers’ tax obligations can be re-profiled to aid housing affordability (Martin, 2017).

The efficiency case for that switch is stronger than the political debate usually allows. A literature review published in NSW Treasury’s technical research paper series concluded that few taxes are less efficient than transfer duties, estimating the marginal excess burden of residential transfer duty at around 90 cents of lost economic welfare for every dollar of revenue raised, with the corresponding average excess burden in the vicinity of 50 cents, and finding that a flat rate levied on the unimproved value of all landholdings is likely to be welfare enhancing (Malakellis and Warlters, 2021). The same review put the likely effect of abolishing transfer duty in New South Wales at an increase in property transactions of between 40 and 70 per cent, with 50 per cent the most likely outcome — households moving for work, for family, for more room or for less of it, who are presently deterred by a tax on moving at all. The honest counterpart is that a broad-based land tax is a recurring charge on the family home, and it falls on households whose wealth sits in their land rather than in their income. That is an argument for a long transition, recognition of duty already paid, and deferral arrangements that let older owners carry the liability against the property — not an argument for leaving the least efficient tax in the state exactly where it is.

The people of New South Wales should also consider alternative land ownership models to those which have caused the affordability crises being experienced. Models such as Community Land Trusts (CLTs), more common to the US and the UK, place ownership of the land component of a property in the hands of a not-for-profit legal entity, while ownership or long-term leasing of the building is by an individual household (AHURI, 2018). One prominent case study is London CLT, an organisation which sought to deliver affordable homes as a legacy of the 2012 Olympic Games. Its first project, on the site of a disused hospital, saw two-bed homes sold at £350,000 (~AU$700,000) less than at market value (Community Land Trust Network, n.d.). The CLT now has many projects across London, one of the world’s least affordable cities. Compatibility between this case study and New South Wales’ plight is clearly observed when considering the incredibly high land costs in Sydney and the plethora of complex disused sites.

Addressing rental stress in New South Wales

Rental stress occurs when households spend more than 30% of their income on rent, leaving little for essentials like food, transport, and healthcare. In New South Wales, it overwhelmingly affects low-income households, who face an acute shortage of affordable homes. AHURI research shows that as of 2021, over 80% of low-income private renters were in rental stress (Pawson et al., 2024). Meanwhile, the share of high-income earners renting has grown sharply – from 8% in 1996 to nearly 24% in 2021 – occupying a large portion of affordable stock and pushing lower-income renters into crisis (AHURI, 2024). This mismatch is worsening inequality: those with the least are paying the most, often for substandard or insecure housing.

The NSW Government’s recent rental reforms have made important progress, ending “no-grounds” evictions, making it easier for renters to keep pets, and banning fees for background checks (NSW Fair Trading, 2025). These protections give renters more security and align with values of fairness and stability. But without tackling affordability head-on, protections alone won’t solve the crisis. For low-income households, rising rents and stagnant incomes mean that even legally secure tenancies can become financially unsustainable. Rental stress is no longer just a fringe issue – it is a structural problem that requires a structural solution (Pawson et al., 2024).

To reduce rental stress, we support targeted investment in affordable rental supply, alongside stronger rent fairness mechanisms. This includes expanding social and community housing, incentivising affordable builds through inclusionary zoning (building on the affordable housing contribution schemes already operating in parts of Sydney), and ensuring financial supports like Commonwealth Rent Assistance keep pace with rising costs (Pawson et al., 2024). We also support limits on unreasonable rent increases and robust enforcement of rental standards (AHURI, 2024). By prioritising low-income renters in policy design, New South Wales can ease stress, prevent homelessness, and ensure that renting remains a viable, fair, and secure housing option for all.

Getting it right with housing diversity

Current debates over the Government’s transport-oriented development rezonings show how fractured the conversation about density has become. Communities often feel ignored as infrastructure struggles to keep up with development, while younger people are priced out of the suburbs where they grew up. This polarisation between “YIMBY” and “NIMBY” voices is symptomatic of a system that has failed to ask the right questions — not about whether people accept what the market already delivers, but about what they actually want from their homes and neighbourhoods and having open conversations about what this could look like.

We propose to co-design an extensive housing lived experiences program with communities to gather real-world housing experiences, needs and aspirations across diverse housing types and tenures. This extensive engagement – possibly via surveys, interviews, focus groups and citizen assemblies – ensures policy and design decisions reflect residents’ lived experiences. This could build from projects like RMIT’s Living Together, involving in-depth post-occupancy interviews with residents, architects, and developers of new housing projects (after 6–12 months of living there) to let participants “paint a personal picture of their world” in describing their homes (RMIT, 2022). This approach produced rich insights on what worked and what didn’t, identifying design improvements to benefit residents and communities.

Similarly, Canada’s national housing strategy consultations in 2016 engaged over 7,000 citizens, bringing “a wide range of opinions” and innovative ideas to the table - from affordability struggles to design preferences – and helped to build public understanding and support for housing reforms (Canada Mortgage and Housing Corporation, 2018). Such an initiative in New South Wales, could draw on best practices from deliberative housing models (like Nightingale Housing’s “deliberative design” approach in Australia) and collective housing research (e.g. RMIT’s Living Together project) to ensure inclusive, representative input. The findings from this program should directly inform future housing strategies, so that policies and developments align with what people actually need and aspire to in their homes.

The cost of delay in the planning system

Planning controls do more than slow homes down; they show up in the price. Research published by the Reserve Bank estimated that, as at 2016, zoning restrictions had raised detached house prices 73 per cent above the marginal cost of supply in Sydney — compared with 69 per cent in Melbourne, 42 per cent in Brisbane and 54 per cent in Perth — and had also raised apartment prices well above the cost of supply, especially in Sydney (Kendall and Tulip, 2018). Delay compounds this. The NSW Productivity and Equality Commission found that development application determination times in New South Wales are long compared with other states and have been getting longer, and that the bottlenecks after consent — conditions, non-planning approvals, utility sign-offs — have attracted far less attention than the assessment stage itself, with one developer reporting roughly 230 conditions to be satisfied before a construction certificate could be issued (NSW Productivity and Equality Commission, 2024).

The arithmetic here is unforgiving. Modelling prepared for that Commission found that adding a year to the pre-construction development period reduces a project’s profit by around two per cent, against an estimated negative feasibility gap of about two per cent for a typical mid-rise Sydney apartment in 2023 — which is to say that, at the margin, delay on its own is enough to stop a building from being built. The Commission’s most useful recommendations are procedural rather than ideological: publicly track post-approval metrics and timeframes, legislate a coordinating and clearinghouse function along the lines of Queensland’s State Assessment and Referral Agency, and expand exempt and complying development so that minor applications stop consuming the capacity needed for significant ones (NSW Productivity and Equality Commission, 2024). None of that requires abandoning design quality or community input. It requires knowing where the time goes, and being answerable for it.

Environmentally responsive housing

The Australian Climate Service (ACS) (2025) recently released the National Climate Risk Assessment (NCRA), highlighting that by 2050 more than 1.5 million homes would be in the “very high risk” range (p.3). Flood-prone regions of New South Wales — the Northern Rivers and the Hawkesbury–Nepean among them — are consistently ranked among the worst affected in the country. The 2022 floods that devastated Lismore and surrounding communities showed what this future looks like: insurance for many properties may be completely unavailable by 2050, as risks to properties are deemed too high. Since every mortgage contract in Australia obliges the holder to have insurance, there will be catastrophic outcomes for high risk homes in New South Wales, which would by definition be unmortgageable, since insurance companies do not insure against likely events.

Richard Denniss of The Australia Institute has stated that these events are “going to do far more to reduce the housing supply than every NIMBY group in Australia could hope to achieve”. The 2022 NSW Flood Inquiry recommended a fundamental rethink of where and how the state builds, and the NSW Reconstruction Authority is now charged with preparing disaster adaptation plans — yet the Northern Rivers experience shows what happens when funding falls short, with the Resilient Homes Program’s buybacks and retrofits reaching only a fraction of the flood-affected households that applied (NSW Government, 2022; NSW Reconstruction Authority, 2024). Completing this work will be vital to guiding investment to bolster and future-proof local infrastructure against natural hazards, since these are our primary defences against the effects of increased drought, flooding and bushfires. Equally, the risks highlighted by insurance figures also underscore a need for future housing to be planned, designed and constructed in ways which avert climate hazards like floods and bushfires, address urban heat island through vegetation provision, and support resilience through other extreme weather events like heatwaves.

Housing construction opportunities

There are also opportunities that New South Wales has not yet seized. Prefabricated and modular housing has been proven overseas as a rapid and cost-effective solution in delivering medium density housing, but regulatory and workforce barriers hold back its wider use (Ziaesaeidi, 2024). Similar examples from abroad show that embedding circular economy principles into housing could reduce costs, cut waste, and open up new pathways for workforce training at scale (Horne et al. 2023). Similarly, new technologies such as artificial intelligence have potential to improve efficiency in the planning system, but they must be guided by professional judgment to avoid compounding errors.

To accelerate sustainable and affordable housing in New South Wales, we propose further investment in circular construction and renovation, particularly through public and social housing pilot projects — building on Homes NSW’s early moves into modern methods of construction. Circular construction minimises waste and carbon emissions by designing buildings for disassembly, material reuse and energy efficiency (Pan and Sidwell, 2021). Examples like the Netherlands’ Super Circular Estate – where a 10-storey housing block was deconstructed and materials reused for new homes – show what’s possible (Zhang et al., 2021). Australian companies like Ecoliv and Modscape are already building modular homes using recycled and low-carbon materials, passive design, and off-site fabrication, demonstrating that circular housing is achievable, scalable and low-impact (Australian Design Review, 2016).

These outcomes are amplified when paired with modular and adaptable construction methods, which improve speed, cost-efficiency, and design flexibility. Extensive international research shows that modular housing can reduce build times by 30–50%, lower costs by 10–20%, and significantly cut material waste – especially in public and affordable housing contexts (Zhang et al., 2021; Loosemore et al., 2020). Built in controlled factory settings, modular homes achieve higher quality, greater resource efficiency, and better health and safety outcomes for workers compared to traditional construction methods (Yosia Sunindijo et al., 2022). Adaptable by design, modular systems also allow for future expansion, reconfiguration or relocation with minimal disruption, extending the life and value of each home (Pan and Sidwell, 2021). Countries like Sweden and Japan have scaled modular construction to deliver thousands of high-performance homes (Ellen MacArthur Foundation, 2024), and Australian innovators like Ecoliv and Modscape are showing how it can work here – faster, cleaner and smarter (Australian Design Review, 2016).

To embed these practices across the housing sector, New South Wales must also invest in workforce development and manufacturing capacity. Initiatives like the Institute of Applied Technology for Construction in Western Sydney, already underway, provide a strong foundation. With tailored training, certification pathways and industry partnerships, New South Wales can grow the skilled workforce needed to deliver modular and circular housing at scale – supporting jobs, innovation and a more sustainable built environment.

These opportunities matter more than they might first appear, because the underlying problem is a productivity failure and not only a funding one. The Productivity Commission’s estimates show that over the three decades from 1994–95 the number of dwellings completed per hour worked by housing construction workers fell by 53 per cent, and that even on a measure controlling for quality improvements and larger dwellings, labour productivity in dwelling construction fell by 12 per cent while labour productivity in the broader economy rose by 49 per cent (Productivity Commission, 2025). The decline is not uniform: labour productivity in house construction has fallen 25 per cent since 2001–02, while higher-density construction — townhouses, units and apartments — improved by 5 per cent over the same period, which is a further reason to take well-planned density seriously rather than treat it as a concession to developers.

The Commission attributes this record to complex and slow approvals, low rates of innovation, a fragmented industry in which the average residential building firm employs fewer than two people, and the sheer volume and instability of regulation — noting that some updates to the National Construction Code proceeded despite regulatory assessments estimating that they imposed net costs on society (Productivity Commission, 2025). We do not read that as an argument for weaker buildings. We read it, as the Commission does, as an argument for weighing the genuine benefits of regulation — safety, build quality, accessibility, emissions and amenity — against its effect on construction costs and housing affordability, and for being willing to say so when that balance has been struck badly. It is a discipline the sustainability and resilience measures we argue for elsewhere in this platform should also be able to meet.