What is Mookhey's $1 billion housing guarantee, and how will it work?
The state government has turned its attention to the private sector to boost housing supply, after two budgets focused on delivering affordable homes for essential workers and social housing.
Treasurer Daniel Mookhey used his third budget to reveal the government would create a $1 billion fund to guarantee up to $50 million in financing for approved housing developments to make the projects more feasible and speed up the delivery of an estimated 15,000 new homes over five years.
Mookhey conceded the scheme was no 'silver bullet', but rejected the Opposition's criticism that the new homes represented a 'drop in the ocean', as he emphasised NSW would need to 'build, build, build' its way out of the long-simmering housing supply crisis.
But he said the government's decision to become guarantor on thousands of residential developments would target one of the biggest roadblocks for developers who want to start building low- and medium-density projects: difficulty in securing enough pre-sales to get finance from lenders.
The government hopes the plan will accelerate the construction of residential projects enabled under its transport-oriented development scheme and low- to mid-rise housing reforms, as it faces an uphill climb to meet its National Housing Accord target to deliver 377,000 homes by mid-2029.
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How it will work
The 'pre-sales financing guarantee' will enable mid-tier developers with approval for low- to medium-density residential projects and initial pre-sales to apply for $5 million to $50 million in financing. Property and Development NSW will assess those developers and projects for their 'credibility, capability and capacity' before agreeing to act as guarantor on up to 50 per cent of dwellings in each project. If approved, developers must start building within six months.
Developers can typically only get lending approval for a project once they hit about 80 per cent of pre-sales. The government's decision to underwrite projects reduces the number of pre-sales a developer needs before a bank is prepared to make a loan available for them to start construction.
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