Fortunes are being made overnight across Sydney as neighbours band together to take advantage of new planning rules that allow apartment buildings in low-rise neighbourhoods.

Multi-million-dollar deals are being stitched together without publicity or even “For Sale” or “Sold” signs, but the change is monumental for developers, planners and groups of owners.

“Ninety-eight per cent of the public that live in these areas have no idea what’s going on,” eastern suburbs real estate agent Ric Serrao told 7.30.

The changes, which took effect on February 28, impact neighbourhoods within 800 metres of 171 train stations or shopping areas in Sydney, Newcastle, Wollongong and the Central Coast.

They are part of a broader goal from the NSW government to build 377,000 new homes over five years to address the state’s housing shortage.

“This has to be the biggest single change that I’ve ever experienced,” said Sydney planning consultant George Karavanas.

George Karavanas says the new planning laws will lead to a boom in apartment construction. (ABC News: Laurence Curson)

His eastern suburbs firm has been swamped with requests from developers to alter existing development applications or submit new ones based on the revised rules.

The changes allow buildings of six to eight storeys to be built within 400 metres of train stations or shopping centres, and up to three storeys between 400 and 800 metres of the locations.

Dual occupancies — where two homes are built on one site — are now permitted and, critically, floor space ratio rules have also changed to allow bigger projects across multiple blocks.

The immediate impact will be more development almost everywhere.

“If you’re in a low-density zone you’re likely to get three-storey flats or duplexes of two to three storeys,” Mr Karavanas said.

“But I think the hive of activity will be in the apartment zones.“

The areas highlighted above show Sydney suburbs that are affected by the laws. (ABC News)

A question of affordability

One goal of the policy changes is to create more affordable housing.

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After a brief downturn home prices have rebounded to new heights, but analysts say growth is likely to be contained. Rents have also reached record highs but growth is expected to slow.

But more housing may not mean cheaper housing, particularly in Sydney’s eastern suburbs, where three-bedroom apartments in new developments are already fetching eye-watering prices.

“I don’t think it’s doing anything for housing affordability in the eastern suburbs,” Mr Serrao said.

“These apartments will be selling for between $5-6 million. If they’ve got views, $8-10 million plus.

“In the outer [eastern] suburbs, Maroubra for example, you’ll start to see a lot more one-bedroom and two-bedroom apartments that will be more affordable.

“But we’re not going to see that in Rose Bay, Edgecliff, Bondi Junction and Double Bay.”

Even if more apartments are built in suburbs such as Double Bay, they will not be more affordable. (ABC News: Shaun Kingma)

In Sydney’s Rose Bay, single-storey homes have been sold for double their prior market value as neighbours amalgamate groups of four or more homes into a single site.

A house located on Dover Road that had been on the market for two years for $8 million sold to a developer last month for $16 million.

In Gordon, on Sydney’s upper North Shore, developers are in the process ofoptioninghomes in residential streets close to the train station as they hone their plans to build eight-storey apartment buildings.

Optioning refers to a process where developers enter agreements with home owners that grants them the right to purchase the property within a certain time period, often at a pre-determined price.

Since the updated planning laws came into effect, Mr Serrao has helped around 28 Rose Bay property owners amalgamate into bigger blocks, in order to sell to developers and he knows of at least 60 amalgamations in a three-block radius.

“Since the reforms have come in, it’s electric,” he said.

Ric Serrao says he has assisted 28 property owners amalgamate to sell to developers in Rose Bay alone. (ABC News: Craig Hansen)

In the suburb of Mosman, on Sydney’s lower North Shore, developers are door-knocking sedate neighbourhoods that had previously escaped the wrecking ball because of tight council controls.

If a development complies with the new rules, councils cannot refuse consent on the grounds of height or density.

“There’s very little we can do,” Mosman Mayor Ann Marie Kimber told 7.30.

She points to a zone of about 20 homes on the slopes of Balmoral beach that could now be redeveloped into six-storey apartment buildings.

“It’ll change the whole landscape of Mosman and of all the suburbs around Sydney,” she said.

Mayor Kimber is not opposed to more apartments, but wants development closer to major bus routes.

Mosman Mayor Ann Marie Kimber says councils have little scope to refuse developments. (ABC News: Shaun Kingma)

Solving a long-term ‘acute’ problem

NSW Planning Minister Paul Scully says the new Low and Midrise Housing Policy addresses decades of planning failures.

“People are finding it increasingly difficult to either buy a house or even find a place to rent,” he said.

“So we needed big solutions and we needed to get on with it because for too long this has been building up.

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“We had to make changes because the problem has become far too acute in Sydney.

“It’s starting to reduce our economic capacity. It’s starting to make us look a less attractive place for global investment and job-creating opportunities because we can’t keep those young people and house those young people.” 

Mr Scully says the changes will alter Sydney’s character.

“Cities aren’t museums. Cities grow and change and evolve over time,” he said.

“We’re a global city and we can’t keep pretending that doing the same thing we’ve done over the last decade if we suddenly do it again this time.“

NSW Planning Minister Paul Scully says the changes will help ease Sydney’s housing crisis. (AAP: Bianca De Marchi )

While it is now easier for low and medium-density housing to be approved by a local council, objections to new developments are still permitted on other grounds, like blocking a neighbour’s view or infringing on their privacy.

Mr Karavanas says it’s unclear what weight consent authorities will give to those objections.

“It hasn’t been tested yet because of the infancy of these provisions,” he told 7.30.

“But in my view there has to be considerable weight placed on them … because otherwise they won’t work (to address Sydney’s housing shortfall).”

He expects some councils to object to many of the new developments.

“I think they will be fighting back quite fiercely,” Mr Karavanas said.

The new planning laws affect neighbourhoods that are within 800 metres of 171 train stations or shopping centres, such as in Gordon. (ABC News: Shaun Kingma)

Hurdles for would-be sellers

In Gordon, residents close to the train station are amalgamating their properties to sell to developers.

In Khartoum Avenue, resident David Tindale says some of his neighbours are being offered at least double their previous property value.

“Previously, the ballpark figures for houses on this street was probably $4-5 million,” he told 7.30.

“Now, in developer money, that’s up to $10-12 million.“

David Tindale says his heritage home will be surrounded by big apartment buildings. (ABC News: Shaun Kingma)

Mr Tindale though, is out in the cold. His house is heritage-listed so cannot be demolished to make way for a development, which he finds immensely frustrating.

“We simply don’t want to be surrounded by tall apartments, lost our privacy, get overshadowed, lose our property value,” he said.

He’s happy for his neighbours, and is in favour of more development along train lines, but feels unfairly excluded as he is one of the owners of around 70 heritage homes in the area who will be affected by the changes.

“I am not against transport-oriented development, I understand that there’s a critical housing shortage in Sydney,” he said.

“I prefer that, if that was the solution the state has found, that we were included in that solution and we could move elsewhere.”

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