The NSW Government has announced an Australian-first Pre-Sale Finance Guarantee to help accelerate housing construction and tackle the state’s housing supply challenges as part of the 2025-26 Budget.
Under the five-year Guarantee, the Government says it will leverage its strong fiscal position to go guarantor on up to 50% of approved housing projects to allow developers to begin construction.
The Government will guarantee residential pre-sales for up to $1 billion of housing projects at a time through a revolving fund.
The initiative will provide between $5 million and $50 million in pre-sale guarantees for each project and is expected to be accepting applications by the end of 2025.
How the Pre-sale Finance Guarantee Works:
- Developers with planning approval and initial pre-sales can apply for the Pre-sale Finance Guarantee, subject to lender approval;
- 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;
- After projects are complete and dwellings sold, the government will issue further guarantees for up to $1 billion of projects at any one time for the 5-year duration of the program;
- If dwellings remain unsold, the developer can “call” on the guarantee and the Government will purchase them at a discounted rate;
- These homes could then be sold to buy or rent, or kept as affordable or social housing.
The Government says neeting pre-sale requirements has been the most common issue cited by stakeholders in securing finance, and has been outlined as a key hurdle for industry in the NSW Productivity and Equality Commission’s Review of housing supply challenges and policy options for New South Wales.
In fact, the number of pre-sales required to secure funding from a registered financial lender has increased in some cases, from 50% of the dwellings to 80% of the dwellings over the last few years, it stated.
“This leads to projects remaining on hold while the requisite number of pre-sales is secured, which can delay construction for months or even years.”
