Detailed Guide to Australia’s 2025 Low and Midrise Housing Policy Stage 2: Opportunities for Sydney Developers

Background and Implementation Date

From February 28, 2025, Australia officially implemented the second stage of the Low and Midrise Housing Policy, aiming to alleviate the current housing shortage by expanding construction permissions for low-rise and mid-rise residential buildings.

This policy presents unprecedented market opportunities for real estate developers in Sydney and surrounding areas, while also introducing new industry competition dynamics.

Key Policy Details

Under the new regulations, the government has relaxed restrictions on housing types and building heights around approximately 171 town centers and stations in the Sydney metropolitan area, Central Coast, Illawarra-Shoalhaven, and Hunter regions. This encourages the development of more diversified housing products.

Specifically:

In areas within 400 meters of town centers and stations, apartment buildings up to six stories high are permitted;
In areas between 400 and 800 meters, residential buildings up to three stories high are allowed.

This policy came into effect on February 28, 2025, with land development rules adjusted accordingly in the relevant areas.

Impact on Developers and Market Opportunities

More Available Development Sites

The relaxed policy means developers can expand projects into a wider range of areas, especially around town centers and transport hubs, no longer limited to traditional high-density zones. This greatly increases the selection of available land, improving land use efficiency.

Product Diversification to Meet Market Demand

With the new policy, developers can transition from primarily focusing on high-rise apartment projects to a mix of low-rise housing (such as duplexes and townhouses) and mid-rise housing (3-6 story apartments).

These types of housing are more attractive to first-time homebuyers and young families, and investment returns are expected to improve, further stimulating activity in the real estate market.

Expected Simplification of Approval Processes

As part of accelerating housing construction, the policy is expected to streamline approval processes, enabling some development projects to be executed faster than before. This is a significant advantage for developers looking to respond quickly to market changes.

Market Challenges

However, the expanded market space also means increased competition.

With a broader policy scope, more small and medium-sized developers and investors are expected to enter the market, particularly in popular areas near transport hubs. As a result, market competition will intensify, and developers need to prepare with clear market positioning and product differentiation strategies.

Additionally, careful management of construction costs, project design, and approval processes remains essential to stand out in this competitive environment.

Seize Opportunities and Face Challenges

Overall, the second stage of the Low and Midrise Housing Policy offers valuable market opportunities for Australian developers. For companies willing to adjust development strategies and actively respond to market changes, this is a window of opportunity not to be missed.

If you require legal support in policy interpretation, land development, project approvals, or contract risk management, please feel free to contact our team of property lawyers to safeguard your projects.