NSW Govt buying up homes to ease housing crisis

The NSW government has announced a “world-leading” policy that will assist property developers in building new housing.

The new Pre-sale Finance Guarantee (PFG) program will commit the Minns Labor Government’s to purchasing off-the-plan dwellings in eligible residential developments, helping developers secure financing and bring construction forward.

Under the five-year initiative, the NSW government claims it will commit to buying up to 50 per cent of homes off-the-plan in approved NSW housing projects.

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The Minns Government’s Pre-sale Finance Guarantee will support property developers. Picture: Thomas Lisson.

Homes up to $2m are eligible, with support ranging from $5m to $50m per project.

The State government says up to $1bn in pre-sales will be committed to new developments.

Minister for Planning and Public Spaces Paul Scully said the policy was a “game changer”.

“This will bring forward the construction of homes, offer greater certainty for our building industry and reduce the level of risk in the financing sector,” he said.

“We have more than 13,000 homes sitting there approved but construction has not commenced.”

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The process for new residential developments in NSW will be accelerated under the new program. Picture: Tom McGann.

Treasurer Daniel Mookhey said the policy was about turning approvals into actual homes.

“This guarantee will give lenders greater confidence, reduce risk in the housing finance market and accelerate the delivery of new homes across NSW,” he said.

Previously, developers were required to have pre-sold as much as 80 per cent of a project in order to secure funding from the banks.

This meant many projects remained on hold, delaying construction for months or even years.

According to the NSW government, the average time between approval and commencement of new apartments has increased from 5.6 months to 7.8 months in the last five years.

Under the PFG, the State Government claims the time between approval and construction will be shortened, while lenders and homebuyers can have greater certainty.

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The PFG will make it easier for developers to secure financing from the big banks. Picture: NCA Newswire.

Minister for Building Anoulack Chanthivong said he Minns Labor government “won’t be sacrificing quality for quantity” in pursuit of increasing housing supply.

“As the Pre-sale Finance Guarantee supports delivering the homes our state desperately needs, the Building Commission NSW will be doing all it can to make sure those homes are well-built by trusted professionals,” he said.

As the PFG increases the number of developments under construction, a key issue will be sourcing the labour force required to build the newly-financed housing projects.

According to Housing Industry Association future workforce executive director Mike Hermon, trade shortages remain a “major threat” to housing supply targets.

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Australia’s skilled labour shortage remains a problem for housing construction. Picture: Brendon Thorne/Bloomberg via Getty Images.

“Due to several factors, including an ageing workforce and competition for trades from other sectors — such as infrastructure and renewables projects — the next generation of trades has not kept pace,” he said.

“The housing shortage that is driving up housing costs for Australian households can only be reduced through efficient delivery of new housing in greater quantities than has been achieved in the past.

“The workforce of the housing industry must grow if this is to occur.”

Mr Hermon said there are an estimated 277,800 skilled trades workers in Australia’s residential building industry, creating an 83,300 tradie shortfall.

“Ensuring that there are readily available and current best-practice training opportunities for people looking to begin a career in the industry, improving pathways for skilled migration, and attracting workers from other industries or segments of the construction industry all have a role to play,” he said.

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