Australia's most expensive market will tackle its housing crisis with a "street-by-street, suburb-by-suburb" strategy as it demolishes and rebuilds hundreds of public housing units.
Low-income households will be offered reduced rent in 74 apartments funded by three levels of government and opened in Sydney on Friday.
The $66 million Boronia Apartments development at Waterloo, in inner Sydney, will cap rents at 30 per cent of household income - a common threshold to define housing affordability stress.
While 74 apartments paled against Australia's target to build 1.2 million homes by 2029, NSW Housing Minister Rose Jackson said incremental progress was the only way.
"We're not going to be able to confront the housing crisis in one fell swoop … it takes project-by-project, street-by-street, suburb-by-suburb," she said.
The building is near the site of an ongoing "renewal project" planned to deliver 3000 homes, more than half of which would be social and affordable housing.
It will involve demolishing existing public housing, which has been in the Waterloo area for decades, prompting some community opposition.
The renewal project will take decades and will be completed in stages.
The relocation of some public housing tenants has begun, with a six-month notice period and support from Homes NSW.
Meanwhile, warnings the ambitious national housing target will not be met by 2029 were batted away by its chief steward on Friday.
Promising to build about 240,000 homes each year, federal and state governments only approved 185,844 dwellings in the 2024/25 financial year - the first full year of a national housing accord.
It was, however, an increase on the previous two financial years, according to Australian Bureau of Statistics data.
Strategies to reach the 2029 target would be discussed at an upcoming economic reform summit, Housing Minister Clare O'Neil said.
"Do we have more work to do? Absolutely," she told ABC Radio National on Friday.
"Our housing crisis has been cooking for 40 years because it is a very hard problem to solve."
Liberal senator Andrew Bragg attacked the government's $10 billion housing fund to boost social and affordable housing for achieving little and acquiring homes in some instances.
"Labor are actually competing with Australians at auctions and making the housing crisis worse," he said.
"Labor's policies are failing."
Data released by property research firm Cotality this week showed housing approvals could increase in the coming months due to rezoning reforms and incentives for new builds coinciding with falling interest rates.
Rather than fix the shortage of homes, it could create a problem for the construction industry by adding new projects to an already long list.
The analysis found delivery, not approvals, was the problem, with 219,000 homes under construction and completion times ballooning.
