The NSW government’s innovative Pre-sale Finance Guarantee is already building momentum in the housing pipeline with a further 300 new homes in Sydney set to start construction. Since its launch late last year pre-sale guarantees have been issued to accelerate the delivery of more than 540 new homes.
The NSW Government established the Pre-sale Finance Guarantee to accelerate the delivery of housing across the state, ease current supply challenges and provide greater certainty for the housing development industry.
Under the programme, the NSW Government commits to purchase off-the-plan dwellings in eligible residential developments to help developers secure finance lenders’ approval and commence construction sooner.
The Government’s commitment to acquire dwellings will be renounceable by the developer, allowing the developer to on-sell dwellings to private purchasers at any time at full market price.
A growing number of residential projects with development approval in Australia were found to be unable to proceed to construction due to a shortfall in pre-sales required to satisfy lenders’ pre-conditions for funding.
The government’s strong credit standing will provide financial institutions with the confidence they need to lend and get residential projects underway sooner.
Ultimately, the government expects that dwellings will be on-sold to the private market prior to or at completion of the dwellings. If the developer is unable to on-sell the dwellings beforehand, the Government will purchase these dwellings once built and ready for occupation.
This certainty will helped developers, Landream and Gaby Group secure construction finance and start building sooner. The guarantees will support 38 of 280 new apartments in the A$900 million Pyrmont Place project and 13 of 30 new apartments, including six affordable homes, in the Elodie development in Westmead.
“Pyrmont Place will deliver world-class residences within a mixed-use precinct which will create significant public amenity and much-needed hotel accommodation in this part of the city,” says Landream Head of Development NSW, Chris Pratt.
“There has been strong demand for the development which is reflected in the pre-sales achieved to date. This, coupled with the NSW Government Pre-sale Finance Guarantee, will allow us to now accelerate the delivery of 285 new homes.”
Pyrmont Place will deliver a mixed-use neighbourhood, supporting the Government’s wider Blackwattle Bay urban renewal plans; while Elodie will provide housing and childcare facilities on the doorsteps of the Parramatta CBD and Westmead’s emerging health and innovation district.
Director of Gaby Group, John Nehme, says “the Pre-sale Finance Guarantee has provided much-needed certainty, allowing us to move forward with confidence and accelerate the delivery of new homes in Westmead.
“Elodie represents our commitment to delivering well-designed, well-located affordable housing that supports the continued growth of the Parramatta and Westmead precinct,” he says.
These commitments build on the support the government has provided for the Rozelle Village revamp of the derelict former Balmain Leagues Club site which will deliver more than 225 new apartments, including 59 affordable homes.
Since launching in October, the Pre-sale Finance Guarantee has gained traction from industry, with 45 expressions of interest already received from developers across the state — one third of which have already been invited to participate.
It also is being adopted by other Australian states and warrants an examination in New Zealand to determine how the guarantee scheme would work here.
To date pre-sale guarantees have been issued to accelerate the delivery of more than 540 new homes in New South Wales, with further pre-sale guarantee requests under assessment that, if approved, could unlock construction of over 130 new homes in regional NSW.
A growing number of residential projects with development approval are unable to proceed to construction due to a shortfall in pre-sales required to satisfy lenders’ pre-conditions for funding.
The NSW Government’s strong credit standing will provide financial institutions with the confidence they need to lend and get residential projects underway.
By committing $1 billion to the program, the Government will satisfy lender pre-sale requirements on eligible projects, ensuring more homes can be delivered faster.
The program aims to fast-track the delivery of thousands of new homes over the next 5 years, support the creation of thousands of direct and indirect jobs, and help attract talent and develop skills for the ongoing success of the residential construction sector in NSW.
“This is about using the NSW Budget to help the household budget,” says government Treasurer Daniel Mookhey.
“In a dual cost of living and housing crisis, we are pulling every lever to support the delivery of desperately needed new homes.
Under the programme, the government may commit to buy through the revolving fund,
off the plan, up to 50 per cent of homes, valued at up to A$2 million each, in a residential development project. Support can range from A$5 million to A$50 million per project, depending on need.
By guaranteeing up to half of pre-sales, the Government removes lender risk, unlocks finance, and gives developers certainty to get more homes built.
Learn more at the planning website.
