We have examined the government’s plan to underwrite housing development in New South Wales. Here is our view on its potential, its limitations, and the questions that remain for builders and the sector at large.
Summary
The NSW Government’s $1 billion pre-sale finance guarantee aims to help unlock housing supply by underwriting up to 50 per cent of approved residential projects. The plan targets stalled developments by addressing financing challenges that have long plagued the sector. But while the scheme offers promise, it also raises important questions. Is it too focused on large developers? Could it be expanded to support the builders who deliver detached homes and smaller-scale projects that communities actually want and need?
A Bold Attempt to Break the Funding Deadlock
The housing affordability crisis continues to dominate headlines, particularly in Sydney, one of the least affordable cities in the world. The NSW Government’s latest intervention is the introduction of a pre-sale finance guarantee, offering a revolving $1 billion facility to help finance housing developments.
The model is designed to reduce one of the biggest barriers to delivery: securing funding for projects in a risk-averse lending environment. Under the scheme, the government will act as guarantor for up to 50 per cent of pre-sales in approved projects. Developers must begin construction within six months of signing the documents, or risk losing support.
If dwellings are completed but unsold, the government will purchase them at a discount and use them for social housing, rent them out, or on-sell them. The plan is to keep the fund revolving, guaranteeing new projects as existing developments are delivered and sold.
Treasurer Daniel Mookhey has positioned the scheme as a practical measure to get homes built, stating, “A housing crisis that was decades in the making will not end overnight. So let us all resolve to keep building. To keep reforming. To make sure that NSW never turns into a state that cannot afford to house its grandchildren.”
Good Policy or Missed Opportunity?
There is no doubt the scheme has the potential to accelerate apartment construction and boost housing stock in the medium term. Industry groups such as the Urban Development Institute of Australia have welcomed the move. UDIA NSW CEO Stuart Ayres described it as “good policy and a great example of government listening and responding to industry.”
But this is where The Good Builder believes the discussion must continue. The guarantee is aimed squarely at larger developers, with minimum project sizes of $5 million and an emphasis on multi-dwelling developments. That may help deliver quantity, but will it deliver the diversity of housing that is actually needed?
Detached family homes, small-lot housing that suits multigenerational living, and adaptable designs that cater to modern Australian households are in high demand. Yet these are the types of projects that are unlikely to benefit directly from the scheme as it stands.
The question is whether government-backed finance models could also be designed to support smaller builders, who are often the ones creating the homes that communities want. If so, could this unlock smarter design, greater housing choice, and more resilient neighbourhoods?
A Piece of the Puzzle, Not the Whole Solution
To its credit, the NSW Government’s budget goes beyond the guarantee. Other measures announced include:
- $122 million to accelerate planning approvals and boost resources in critical agencies
- $145 million in additional funding for the Building Commission to strengthen regulation
- Ongoing build to rent tax concessions and new Works in Kind guidelines
- Funding for TAFE and apprenticeships to address skills shortages
All of these initiatives are important. But as many in the sector have pointed out, the housing challenge is deeply complex. It requires solutions that do more than speed up apartment builds. It demands a genuine focus on land supply, better planning outcomes, and support for the builders delivering homes that will last and meet the needs of future generations.
Mark Speakman, leader of the NSW Opposition, reflected the scepticism of some when he described the scheme as a “drop in the ocean” and argued that the budget did not do enough to address the underlying cost and regulatory barriers that hinder new housing supply.
What Builders Should Be Considering
At The Good Builder, we see this as an important moment for reflection. The guarantee represents a significant government intervention in the housing market, but it is just one piece of the puzzle. Builders, suppliers, and policymakers alike should be asking:
- How can similar support be extended to the builders delivering smaller, high quality homes?
- What more can be done to address land supply, design standards and affordability in detached housing?
- Are we balancing the urgent need for more housing with the equally urgent need for the right kind of housing?
The pre-sale guarantee is a bold start. The next step must be a conversation about how to ensure all parts of the building industry — from tier one developers to small builders — are empowered to deliver what our communities truly need.
If you have a perspective to share or a story of how your business is navigating these challenges, we invite you to get in touch. Together, we can help shape a more balanced and effective housing future.
Contact us at [email protected] or connect via LinkedIn.
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