In an Australian first, the NSW government will guarantee pre-sales to kick-start construction on housing projects.
As part of its 2025-26 state budget, the NSW government has announced a Pre-Sale Finance Guarantee to speed up construction of new homes.
The five-year scheme will allow the state government to be guarantor on up to 50% of pre-sales for approved housing projects so that developers can begin construction on these projects.
This means the government will guarantee residential pre-sales for up to $1 billion of housing projects at a time, facilitated through what is being described as a “revolving fund”.
Each project will receive between $5 million and $50 million in pre-sale guarantees, with applications expected to start coming through by the end of the year.
According to the government and industry bodies, meeting pre-sale requirements has been a common issue in securing finance for projects.
It often leads to projects remaining on hold while the requisite number of pre-sales is secured, which can delay construction for months or years.
The scheme allows the NSW government to be guarantor on up to 50% of pre-sales for approved housing projects. Picture: Getty
The process starts with developers that have planning approval and initial pre-sales applying for the guarantee, subject to lender approval.
From there, the NSW government will assess projects and developers based on their credibility, capability and capacity.
If approved, construction must begin within six months of signing the documents.
Once projects are completed and dwellings are sold, the government will then issue further guarantees for up to $1 billion of projects for the five-year duration of the scheme.
If dwellings remain unsold, the developer can “call” on the guarantee and the government will purchase them at a discounted rate. This means these homes could then be sold to buy or rent or kept as affordable or social housing.
The Property Council of Australia welcomed the announcement and called it a practical response to a large barrier in getting new homes built.
“This is a real breakthrough. Our feasibility research with Savills last year confirmed finance as one of the most significant barriers to feasibility. Projects that tick all the boxes – planning approval, market demand, sound delivery partners – are unable to proceed because developers can’t meet unworkable pre-sale thresholds,” Property Council NSW executive director Katie Stevenson said.
“The Pre-Sale Finance Guarantee responds directly to that issue and to the conversations we kickstarted last year. It couldn’t come at a more critical time when we’re facing a steep climb to achieve our National Housing Accord target of 377,000 new homes by 2029.”
The Urban Development Institute of Australia also praised the scheme, with NSW CEO Stuart Ayres noting it as good use of the government’s balance sheet to fast-track construction.
“The pre-sale finance guarantee will see many apartment projects get underway faster,” Mr Ayres said.
“It’s good policy and a great example of government listening and responding to industry.”
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