The NSW government's decision to cut stamp duty and speed up council development approvals will go a long way to improving NSW's housing shortage, experts say.
As part of its 2010/11 budget, the NSW government announced it will cut stamp duty to zero over the next two years for anyone planning to build a new house or apartment.
Housing Industry Association (HIA) chief economist Harley Dale said it was an important step towards improving the supply of housing in NSW.
"In terms of new home building activity, it's a very welcome step," Mr Dale said.
"These are policies that clearly have potential to boost housing activity in a state that's long under performed."
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The major initiative is due to start on July 1 and applies to anyone who builds a new home or apartment worth up to $600,000.
NSW Treasurer Eric Roozendaal told parliament on Tuesday the plan will save homebuyers up to $22,490.
Stamp duty will also be cut by 25 per cent on homes that are under construction or have just been built, saving homebuyers an estimated $5,623.
The construction industry will also get a boost, with the government capping local government infrastructure levies on housing developments.
The budget papers said local councils would receive $35 million in direct funding to help fast-track development and another $8.9 million to speed government planning reforms.
"The planning reforms, changes to levies and the zero stamp duty opportunities will encourage the supply of new housing to remove some of the inefficiencies in the current system," NSW Business Chamber CEO Stephen Cartwright said.
"Housing affordability has the potential to become a significant business issue in coming years as workers get priced out of Sydney accommodation.
"This will result in skills shortages and will increase pressure on transport and infrastructure."
In March, the number of housing finance commitments in NSW stood at 13,637, down from the record high 20,078 seen in May 2009, Australian Bureau Statistics (ABS) figures show.
Meanwhile, ABS figures also show 25,191 homes were built in NSW in 2009.
This compares to the average number of 42,222 homes built each year in the two decades to 2009. AAP eb/evt 08-06-10 1547
