_Density Done Right? NSW’s Bold Plan to Rethink Housing Around Transport

NSW’s Big Bet on Transit-Led Density. New South Wales is reshaping housing by building developments around transport hubs. The Transport-Oriented Development program covers 45 precincts, creating medium- and high-rise communities with direct rail access. While the government drives this initiative, some stakeholders remain unconvinced.

February 20, 2026

TOD: Promise and Pushback.

The policy was mapped out by Minns Labor Government’s housing and planning reforms and was first announced in late 2023. It aimed to tackle the state’s housing crisis by encouraging higher density development around train stations and transport hubs. By granting bonus floor space ratios and increased height allowances, the state is incentivising developers to unlock new housing supply where infrastructure already exists.

The logic behind TOD extends well beyond planning efficiency. For residents, proximity to transport is consistently one of the most valued features in housing choice. Easy access to rail or bus networks reduces reliance on cars, lowers household transport costs, and shortens commute times, all of which improve quality of life. It also supports more sustainable urban growth, as higher density near stations reduces congestion and creates vibrant precincts where people can live, work, and socialise without travelling long distances. In a market where affordability pressures are intensifying, homes near reliable public transport command a premium, offering both lifestyle benefits and long-term value for buyers and investors alike.

Since late 2024, there has been a surge of Development Applications (DAs) and State Significant Development (SSD) proposals targeting TOD sites. The Housing Delivery Authority (HDA) has also submitted circa 260 major housing projects into the SSD pathway in partnership with the NSW Department of Planning, Housing and Infrastructure (NSWDPHI), aiming to accelerate delivery and bypass traditional bottlenecks.

However, several Local Government Areas (LGAs) have expressed concerns about ceding too much control, opting to develop their own precinct-level frameworks. This tension between state ambition and local autonomy has the potential to slow delivery, even as demand for housing intensifies. It underscores a central challenge in the initiative; how to balance the urgency of supply with the need for place-based planning that reflects local character.

Costs Plateau and Confidence Builds.

Overlaying these policy shifts, there’s a recalibration taking place. After years of sharp increases, NSW market conditions are slowly turning more favourable for developers. While labour costs continue to rise, materials have stabilised, and NSW apartment development costs have slowed, pushing IRRs back into feasible ranges.

At the same time, the recent cycle of interest rate reductions has also brought renewed confidence, particularly in the residential housing sector, where demand remains strong despite ongoing affordability challenges. The combined effect is a market where confidence is cautiously returning.

The Property Council/Procore Industry Sentiment Survey also shows rising confidence in NSW’s property sector, with stronger hiring and project pipelines. Developers are beginning to re-engage with projects that were previously shelved, encouraged by the alignment of government policy and more stable cost structures.

A Pivotal Moment.

The planning system is playing catch-up. In response to the rapid pace of applications and development interest, the state is revising its urban design frameworks to ensure liveability and design quality don’t fall by the wayside in the race to build more homesThese updates aim to strike a balance between fast approvals and the longer-term vision for sustainable, community focused precincts. The task for policymakers both State and local is to avoid creating high-density soulless neighbourhoods and instead promote high quality places to live and deliver long-term sustainability and amenity. Equally, resolving the friction between state and local government will be essential. Without a collaborative approach, the risk is that parallel planning processes add complexity, undermining the very efficiencies the TOD program is designed to achieve adding uncertainty and the very delays that the planning reforms aim to tackle.

Conclusion.

While the TOD initiative, targeted at 45 precincts near transport hubs could solve problems involved with the current housing crisis and improve sustainability within communities, it has run into headwinds with several council’s wanting to control their own planning frameworks. With the ultimate goal of creating high density, high quality places to live without sacrificing local character or sustainability it must be ensured that design quality and liveability aren’t compromised within the push for approvals.

Ultimately this initiative aims to address the housing crisis by incentivising development near rail and public transport with relaxed planning controls and fast tracked approval mechanisms.