Solutions to housing problems in NSW have had mixed success

It remains unclear whether the series of policy changes aimed at increasing housing supply in New South Wales will actually bear fruit.

Last year, around 48,000 homes were completed in NSW, significantly short of the state’s target of building 75,000 homes annually over the next five years to meet the National Housing Accord targets.

However, Colliers director Adrian Miller said further policy changes were needed.

“Policy changes must prove effective in creating the next sites for redevelopment so our children have a place to live,” Miller said.

According to Miller, a number of new policies, such as the affordable infill housing provisions within the Housing SEPP, were attractive to developers.

Under the policy, which was introduced late last year, developers are eligible for height and floor area bonuses of up to 30 percent, including at least 15 percent affordable housing.

Ashleigh Ryan, director of Urbis, said that of the recent policy changes, this one has been the most successful.

“We have prepared and submitted a number of State Significant Development Applications under the policy since it was announced in December last year,” Ryan said.

But the Transport Oriented Development (TOD) programme, also introduced late last year, has yet to yield any significant results.

Of the 37 TOD districts that were eligible for zoning change within 400 meters of stations, 18 were active.

The original TOD plans called for the state-wide redistricting to take effect in all constituencies from April this year. However, 19 municipalities have been granted a postponement until later in the year.

Rezoning land near transportation corridors is intended to provide an economic incentive for new supply. However, developers face the challenge of achieving a return on investment in locations with high land values ​​and limited development scales allowed by the TOD program.

Residential buildings may be a maximum of 22 metres high, shop fronts a maximum of 24 metres, with a maximum floor area ratio of 2.5:1.

There is also a requirement that 2 percent of developments consist of affordable housing.

▲ Last year, about 48,000 homes were built in New South Wales, a significant miss on the target of 75,000.

Ryan said she hadn’t seen much interest in the policy from developers, saying the TOD program was a way to build more housing, not a silver bullet.

“It will work in some neighborhoods where the final sales price of those units justifies the cost of consolidating the site and the construction costs, but in many neighborhoods it’s hard to justify,” Ryan said.

Guillaume Volz, national director of Colliers, said the TOD policy “frees up a lot of land for development, but the economic benefits do not translate into all areas”.

“For example, if a developer buys a house as part of a development site in Dulwich Hill, which is predominantly semi-detached on a 2,540 sq ft plot, then the gross floor area provided under the TOD scheme will not drive value uplift in that market,” Volz said.

“But while development growth may be too low in some areas, there are other areas where it is feasible.

“If you take Roseville, for example, you have properties with a lot of land and higher valuations. When that is combined with the increase in floor area that has been achieved through the TOD, that provides sufficient incentive for owners to drive development and consider collective sales with their neighbours.

“If you get the economy going, you can also get housing going.”

The first phase of the reforms for low and medium-rise housing came into effect on 1 July and provides for the construction of semi-detached and semi-detached houses.

But the policy stage that would allow for more terraced houses, townhouses and small apartment complexes has been postponed until later this year.

David Allen, developer and founder of DA Properties, said the reforms in the low and mid-rise housing market were welcome.