City of Sydney council votes to join national push for mandatory affordable housing targets in all new developments

The City of Sydney council voted 7-3 last night to formally endorse a national framework requiring all new residential developments of 10 or more dwellings to include at least 15 per cent affordable housing. The motion, introduced by Labor councillor Linda Scott, commits the council to lobby the NSW government to adopt the same mandatory targets that are already being tested in Melbourne and Brisbane council areas.

The vote comes as Sydney's median house price sits at $1.45 million and rental vacancy rates hover below 1.5 per cent across the inner city. The Productivity Commission's March 2026 housing affordability report found that Sydney needs an additional 45,000 affordable rental dwellings over the next five years to meet current demand. The council's decision aligns with a growing push from the Australian Local Government Association for consistent national rules rather than the current patchwork of voluntary agreements.

How Sydney compares to other capitals

Melbourne's Yarra City Council adopted a similar mandatory 15 per cent target in February 2025. Brisbane City Council followed in November 2025, requiring 12 per cent affordable housing in developments over 20 units. Both have reported a 30 per cent increase in affordable housing applications filed in the first six months after adoption, according to data submitted to the national local government conference in May 2026.

For Sydney residents, the policy change is projected to mean roughly 800 new affordable rental units per year within the City of Sydney local government area once the state government passes enabling legislation. The council's own modelling, released in the meeting agenda, estimates that the mandatory target will add between $8,000 and $12,000 per unit in construction costs, which the council says will be offset by density bonuses allowing developers to build an extra storey on eligible sites.

What happens next

The council will now write to the NSW Minister for Planning, Paul Scully, formally requesting that the state government amend the Environmental Planning and Assessment Act to make the 15 per cent target a standard condition across all Greater Sydney councils. The state government's own discussion paper, released in April 2026, canvassed a possible 10 to 20 per cent range but has not set a final figure.

Local advocacy groups are already watching the outcome. The Western Sydney Community Forum noted in a pre-meeting submission that mandatory targets will only work if the definition of 'affordable housing' is tied to local median incomes and not a single state-wide benchmark. The council's motion specifies that affordable dwellings must be priced at no more than 30 per cent of gross household income for households earning up to 80 per cent of the area median income.

The next step is a formal response from the NSW government, expected within 90 days. If the state adopts the targets, developers will need to factor the requirement into all new project applications lodged after 1 July 2027. Until then, the City of Sydney will continue its existing voluntary program, which has delivered 230 affordable units since 2020, far short of the council's stated target of 1,000 per year.