The Property Council of Australia has called on the NSW Government to use the 2026–27 State Budget to address mounting feasibility pressures that are preventing thousands of approved apartments from progressing to construction.
Ahead of the organisation’s 2026 NSW Residential Outlook event in Sydney last week, the Council’s NSW Executive Director, Anita Hugo, warned that apartment commencements remain well below historic levels, despite strong demand for housing and a large pipeline of approvals.
Citing new research from consultancy Urbis, Ms Hugo said 75 per cent of apartments approved in Metropolitan Sydney since 2020 have not yet progressed to construction.
“Years of cost escalation have increased commercial risk and slowed the commencement of approved projects,” she said.
The figures highlight a persistent gap between planning approvals and actual housing delivery, raising concerns that existing policy settings are not translating into homes on the ground.
Approvals not converting to starts
The data referenced by the Property Council comes from Urbis’ 2025 Apartment Essentials research, which examined the status of apartment projects approved across Metropolitan Sydney over the past five years.
According to the analysis, three in four approved apartments have stalled prior to construction. At the same time, apartment starts remain well below the levels recorded in the mid 2010s, when Sydney experienced a significant wave of high density development.
The gap reflects a broader national trend in which development feasibility has tightened due to rising construction costs, elevated interest rates, labour shortages and increased compliance requirements.
Industry stakeholders argue that while planning reform has helped to streamline approvals in some areas, the financial realities of delivering projects have become increasingly challenging.
Feasibility package proposed
In its Pre Budget submission, the Property Council has called for a targeted feasibility package aimed at improving project viability and accelerating commencements across NSW.
Key recommendations include:
- A moratorium on new taxes, fees and charges throughout the five year Housing Accord period.
- Suspension of Sydney Water Development Servicing Plan charges.
- Suspension of the Housing and Productivity Contribution.
- Deferral of all local and state infrastructure contributions to the occupation certificate stage.
The proposal to defer infrastructure contributions is consistent with a recommendation made by the NSW Productivity Commission in its 2020 review. That recommendation has not yet been implemented.
Under the proposed model, developers would still pay the full amount of contributions, but payment timing would shift to the end of the project. The Property Council argues this would improve cash flow during construction without reducing revenue to government.
From the Council’s perspective, timing and certainty are central to feasibility.
“This Budget can alleviate the cost and timing barriers that are preventing apartment projects from reaching construction,” Ms Hugo said.
Pre Sale Finance Guarantee expansion
The submission also calls for the NSW Government to build on its recently launched Pre Sale Finance Guarantee program.
The first deal under the program was announced last month, providing backing to a project that had struggled to meet traditional pre-sale thresholds required by lenders.
Pre-sale requirements have tightened in recent years, particularly for apartment developments, with financiers often requiring a high percentage of units to be sold before construction funding is released.
The Property Council argues that expanding the guarantee model would allow more approved projects to meet lending criteria and proceed to construction.
“NSW’s first Pre Sale Finance Guarantee deal shows the model works,” Ms Hugo said. “Continuing to build on this will help more approved projects meet today’s pre-sale requirements and move into construction.”
System capacity and planning reform
Beyond financial feasibility, the Council has also highlighted system capacity as a critical constraint.
Its submission calls for additional resourcing within the Department of Planning, Housing and Infrastructure, as well as local councils and referral agencies, to support timely rezonings and streamlined development assessments.
Recent planning reforms, including the establishment of the Development Coordination Authority and the introduction of a new targeted pathway for simpler projects, have been welcomed by industry groups.
According to the Property Council, these reforms represent positive structural change, but require adequate funding and staffing to deliver faster decisions in practice.
“We’ve seen strong commitment from Government with these reforms which will help to clear the backlog,” Ms Hugo said. “With the right Budget support, we can turn that momentum into faster decisions and more homes on the ground.”
Broader housing context
The call for targeted feasibility measures comes amid ongoing concern about housing supply across NSW.
Apartment development plays a significant role in meeting housing targets, particularly in established urban areas close to jobs, transport and services.
However, development viability has been under sustained pressure from multiple fronts:
- Construction cost inflation over recent years.
- Higher borrowing costs.
- Increased regulatory and compliance obligations.
- Infrastructure contribution settings.
- Slower pre-sales in some sub markets.
Industry bodies argue that without intervention, the mismatch between approvals and commencements will persist, limiting new housing supply even where planning pathways are available.
The Property Council’s 2026 NSW Residential Outlook event examined what it describes as the need to lift speed, diversity and build quality across the apartment sector.
Scheduled speakers included NSW Minister for Building, The Hon. Anoulack Chanthivong, alongside senior representatives from Aqualand, Colliers Urban Planning, the Department of Planning, Housing and Infrastructure and Urban Property Group.
The event focussed on rebuilding feasibility, supporting innovation and strengthening coordination between government and industry to ensure that planning reform translates into tangible housing outcomes.
Turning reform into delivery
The debate highlights a central policy challenge: approvals alone do not guarantee delivery.
While NSW has introduced planning reforms aimed at accelerating housing supply, industry groups argue that financial and timing barriers must also be addressed to unlock stalled projects.
Supporters of the Council’s proposals say measures such as contribution deferrals and expanded finance guarantees could improve short term viability without reducing long term public revenue.
Critics may argue that any suspension or deferral of charges risks shifting fiscal pressure elsewhere or delaying essential infrastructure funding.
As the 2026–27 Budget approaches, the NSW Government faces the task of balancing housing supply objectives, fiscal constraints and infrastructure commitments.
For the Property Council, the message is clear: the approved pipeline already exists. The challenge now is converting that pipeline into construction activity and completed homes.
Whether the upcoming Budget delivers the targeted feasibility support sought by the sector will likely shape the pace of apartment commencements across NSW in the years ahead.
0 Comments