More housing projects in NSW are being shelved as costs climb and feasibility erodes, raising fresh questions about future supply, prices, and credit demand that mortgage advisers will need to watch.
A new NSW Treasury report shows the state’s Housing and Productivity Fund has a $1.46 billion shortfall, confirming that fewer projects are getting off the ground and that the infrastructure contribution model is under pressure.
The Property Council of Australia says this aligns with its earlier “Release the Pressure” feasibility work with Savills, which warned that too many projects simply “don’t stack up”.
Property Council NSW executive director Anita Hugo (pictured) said the NSW Treasury Housing and Productivity Fund Financial Report for 2024–25 was both a warning sign and an opportunity for policy reset.
“We have long made the case that you cannot fund roads, pipes, and schools off homes that never get built," Hugo said. "To the end of June 2025, the fund collected just $39 million of its $1.5 billion four-year forecast because the underlying pipeline is smaller than predicted.
“Our ‘Release the Pressure’ feasibility work with Savills identified this problem more than a year ago. The task now is to reset policy settings, so more Housing Accord-period projects move from spreadsheet to construction site.”
For advisers, the shortfall underscores a structural issue: contributions are being levied on a shrinking base of viable projects. That in turn threatens medium‑term supply, keeping pressure on prices and affordability even if demand softens.
“While we recognise the Housing and Productivity Contribution (HPC) was always going to have a lead-in period, the feasibility evidence suggests the remaining two-year task to reach the $1.5 billion forecast now looks increasingly optimistic," Hugo said.
“We also recognise the state is continuing to fund infrastructure through legacy special infrastructure contributions, voluntary planning agreements, and other programs. Today’s news shows why that agenda now needs to be deepened and targeted through a feasibility lens.
She said the NSW government deserved credit for the reforms introduced during the year to support housing delivery and growth, and that industry remained committed to working with government to further alleviate pressure by ensuring workable investment settings.
Savills research commissioned by the Property Council paints a challenging pipeline outlook for the Housing Accord period to 2029.
Savills found that:
“These costs include Sydney Water development servicing plan (DSP) charges that can add tens of thousands of dollars per lot, the HPC of up to $12,000 per dwelling, and council contributions above $60,000 per lot in some LGAs," Hugo said.
“To 30 June 2025, the fund has raised about $39 million against a four-year forecast of $1.5 billion. That gap is the result of a cost stack that makes standard projects unviable. You cannot collect contributions on projects that never commence.”
The Property Council argues that fair contributions are essential, but the cumulative impact of new and existing charges is pushing otherwise standard projects below feasibility thresholds – particularly in more affordable outer-suburban and regional markets that many borrower segments rely on.
“We support fair, well-designed contributions to pay for local and state infrastructure. But when you add the HPC to Sydney Water charges, local levies and higher construction and finance costs, otherwise typical projects no longer clear feasibility hurdles across many markets," Hugo said.
“Savills found that many infill apartment projects are financially unviable even before you add new costs like the HPC and recent DSP increases. This is not just a timing issue. It is a feasibility issue that needs a fresh and measured policy response,” she said.
For mortgage brokers, that feasibility gap can translate into:
That mix – tighter local supply colliding with national schemes making it easier to buy with smaller deposits – could intensify competition for limited stock in certain price bands and postcodes.
To rebuild the pipeline on which both the Housing Accord and the Housing and Productivity Fund depend, the Property Council is proposing a targeted package for the Accord period to 2029.
It is calling on the NSW government to:
“We want to work with the government to turn these numbers around. If we put feasibility first for the Housing Accord period, we get projects that stack up, homes built, serviced industrial land to support jobs, and a larger, more reliable stream of revenue to pay for the infrastructure communities need,” Hugo said.
All of this is playing out as national programs ramp up, with Housing Australia backing tens of thousands of homes and buyer‑focused schemes such as the Home Guarantee and Help to Buy expected to bring more constrained‑deposit borrowers into the market.
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