NSW pre-sale guarantee adds 79 apartments to the construction pipeline

Two Sydney apartment projects containing 79 homes have secured support through the NSW Government’s Pre-sale Finance Guarantee, bringing the total number of dwellings accelerated under the program to almost 1,300.

The projects are at Moorebank in south-west Sydney and Kingsford in the city’s east. Together they are expected to provide 35 affordable homes as well as market-priced apartments.

The NSW Government said on Friday that it would make pre-sale commitments over 29 of the 58 apartments planned for Harvey Avenue, Moorebank, and 10 of the 21 apartments proposed for Strachan Street, Kingsford.

The commitments are designed to help the developers satisfy lender requirements and obtain construction finance. They do not mean the government is directly financing buyers or guaranteeing that every dwelling will be completed by a particular date.

What the two projects will deliver

UFN Developments’ Moorebank project has an estimated value of $44.5 million and is planned to contain 58 apartments. Thirty-one are designated as affordable housing for low-to-moderate-income households.

The guarantee covers 29 apartments, including two of the affordable homes.

Advent Property Group’s $32.4 million Kingsford project is planned to deliver 21 apartments, including four affordable dwellings near the university and hospital precinct. The government’s commitment applies to 10 apartments.

The announcement did not provide completion dates or sale prices. The projects therefore add to the construction pipeline rather than the supply of homes immediately available to buyers or renters.

How the guarantee unlocks finance

Apartment developers commonly need to sell a set proportion of a project before a lender will release construction funding. When presales are slow, an approved development can remain stalled even if there is underlying demand for more housing.

Under the NSW program, the government signs commitments to buy selected dwellings off the plan. The commitments count towards the presale threshold required by the developer’s lender, allowing construction funding to be activated earlier.

For developments of more than 20 homes, support can generally cover up to half of the dwellings and no more than $50 million per project. Smaller projects can receive commitments over as much as 75 per cent of their homes, while registered not-for-profit community housing providers can receive support for all affordable dwellings, subject to program caps.

The government commitment is generally set at a discount of at least 10 per cent to an independent assessment of completed market value. The discount does not apply to eligible affordable housing delivered or acquired by registered community housing providers.

Developers must continue marketing the dwellings and can replace the government commitment by selling to private buyers. If supported homes remain unsold at completion, the government may acquire them and then sell or rent them, depending on market conditions.

The program operates through a $1 billion revolving facility, meaning capacity can be reused as commitments are released or homes are sold.

What buyers should not assume

Acceptance into the scheme is not a government endorsement of an apartment project. The program’s official guidance says the purchase commitment is not a warranty covering the development’s quality, delivery or financial outcome.

Off-the-plan purchasers should still investigate the developer and builder, examine the contract, understand sunset and variation clauses, and obtain independent legal advice. Buyers should also check how the final design, finishes and dimensions may differ from sales material.

The latest commitments are nevertheless relevant to the wider market. If the guarantee succeeds in moving viable projects from approval to construction, it can shorten the delay between planning approval and new supply. The 35 affordable dwellings also give the two projects a larger housing benefit than an entirely market-priced development of the same size.

The almost 1,300-home total is a measure of dwellings within supported projects, not completed homes. The program’s effect on supply will ultimately depend on construction starting, projects reaching completion and homes becoming occupied.

What it means for you

• Buyers may see more off-the-plan stock proceed where weak presales previously delayed construction.
• Government support is not a substitute for legal, financial and building due diligence.
• Moorebank and Kingsford gain 35 planned affordable homes between them.
• The 1,300-home figure describes accelerated projects, not dwellings already completed.