Housing, infrastructure and new project investment have emerged as key themes in the New South Wales budget for 2025/26.

In what has been described as a fairly safe budget overall with ‘nothing flashy’, the NSW Government has handed down its state budget for 2025/26.

Overall, the budget forecasts a deficit of $3.4 billion in 2025/26, with the next surplus expected in 2027/28.

This will see the state’s gross debt increase to $178.8 billion or 19.5 percent of the state’s economy in 2025/26 before reaching $199.7 billion or 19.6 percent of gross state product by June 2029.

From the viewpoint of the building, engineering and construction sector, the budget provides significant investments in housing, a continuation of the state’s massive infrastructure program and investment to facilitate innovation and large-scale privately funded projects.

In terms of housing, the budget will create a new $1 billion revolving fund that will act as a guarantor for presales on new medium scale housing developments.

Set to run for five years, the fund will support approved projects which are valued at between $5 million and $50 million.

It will provide guarantees for presales on approved projects worth up to 50 percent of the project.

The funding will be made available (subject to application and lender approval) to developers who have planning approval and initial pre-sales.

If units remain unsold, developers will be able to ‘call’ on the guarantee and the Government will purchase them at a discounted rate. The homes could then be sold to buy or rent or could be kept as social and affordable housing.

According to the Government, the guarantee provided by the fund will help mid-tier developers to secure the funding which they need to bring new housing projects online and will remove a significant barrier to new housing delivery.

Meeting pre-sale requirements has been the most common area of frustration which has been cited by developers in securing finance for residential projects, the Government says.

Other housing initiatives include:

• More favourable tax treatment for build-to-rent developments by enabling developers to access a land tax concession of a 50 percent reduction in assessed land value indefinitely rather than the 2039 end date that weas previous set by the former government.
• Enabling developers who build approved infrastructure such as major roads or setting aside land for schools and other community infrastructure to claim costs associated with their investments against the Housing and Productivity Contribution.
• $145.1 million in funding for Building Commission NSW to continue efforts to improve building quality.
• Money for skills including training new construction apprentices. This includes $40.2 million to fund up to 90,000 fee free apprenticeships and traineeships and $13.8 million to support 4,800 existing workers to transition into the construction workforce as well as to re-train existing skilled migrants to the point of trade accreditation; and
• $4 million in a new crisis intervention package to support people in urgent need of housing.

Next, the budget continues the rollout of the state’s massive infrastructure program.

All up, the budget provides for an infrastructure spend of $30.0 billion across 2025/26 and $118.3 billion over the four-year estimates period.

This is roughly double roughly $15 billion average level of annual investment which occurred during the four-year period spanning 2013 until 2017.

Specifically, the budget includes:

• $55.6 billion in transport infrastructure over four years. This includes $10.8 billion across four years for the Sydney Metro West, $3.6 million for Western Sydney Airport and $801 million for Sydney Metro City and Southeast; major road investments (supplemented by $11.1 billion in Federal contributions) including the state spending $3.8 billion over four years on the Western Sydney Harbour Tunnel as well as spending on other new roads and upgrades; and $2.1 billion for a zero emissions busses program as well as $843 million for the regional rail fleet.
• $12.4 billion over four years to build and upgrade health infrastructure
• $9 billion for school infrastructure investment over four years
• $2.1 billion over four years in the Transmission Acceleration Facility to support development of the state’s five renewable energy zones.

A final area of focus involvement promotion of new investment and support for private sector projects.

On this score, the budget allocates $17.7 million to establish and support the work of a new Investment Delivery Authority.

Set to operate in a similar manner to the state’s Housing Delivery Authority, the new body will help to fast track-track assessment and approval of major private sector projects in areas such as AI, clean energy and new and innovative industries.

It will be open to expressions of interest from projects that are valued at more than $1 billion.

All up, the Government expects the new Authority to assist around 30 projects each year. Potentially, this could help to bring forward up to $50 billion in annual investment.

The budget also includes $80 million to deliver the state’s Innovation Blueprint – a ten-year plan to which sets out a long-term vision and policy priorities to support the state’s innovation ecosystem.

This includes $38.5 million to help the new Tech Central precinct to flourish as a new melting pot for groundbreaking innovation as well as programs to support startups, commercialisation, female entrepreneurship, innovative manufacturing and housing and construction innovation.

(The budget allocates $10.8 billon over four years for the Sydney Metro West Project).

Building industry lobby groups broadly welcomed the latest measures but warned that more needs to be done to address housing shortfalls.

In a statement, Stuart Ayres, CEO of the Urban Development Institute of Australian NSW (UDIA NSW), welcomed several of the initiatives around housing.

But he said that more needed to be done to unblock new housing supply.

“The State is in the grip of a housing supply and affordability crisis, costing the economy an estimated $10 billion annually in lost productivity, talent, and innovation,” Ayres said.

“The only realistic path forward is to urgently remove barriers to new housing supply,”

Meanwhile, Urban Taskforce Australia CEO Tom Forrest hailed the new pre-sale guarantees as a significant win for the development sector.

According to Forrest, the guarantee will l reduce the number of pre-sales required before a financier is prepared to make the loan available for construction.

With a pre-sales finance guarantee in hand, he says that developers will be more readily able to access finance from banks as opposed to non-bank debt lenders, who charge significantly higher interest rates.

“This is a smart way to leverage government funds,” Forrest said.

“This is a clear signal that the NSW Government appreciates the importance of working with the private sector as the key actors capable of solving the housing supply crisis.”

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