The rules have changed — so why is the Illawarra still stuck in a housing crisis?
In 2023, the Illawarra's business community met to strategise on the housing crisis, we explore what has changed ahead of Business Illawarra's 2026 Future of Housing summit.
The Illawarra’s housing debate has moved beyond approvals to the harder question of what actually gets built, with business leaders warning infrastructure delays are now the main brake on new supply.
After sweeping planning reforms in NSW, Business Illawarra director Coralie McCarthy says the policy settings have improved, but the region is still struggling to convert ambition into built form – particularly in major growth corridors where roads, flood access and transport links remain unresolved.
“For me, the biggest and most obvious changes is the huge reform Minister [Paul] Scully has done in the planning space,” McCarthy said. “It’s been amazing.”
“But the challenge that remains is cross-government collaboration and investment in enabling infrastructure. It’s still a massive barrier from my point of view.”
And solving the problem of infrastructure will likely be top of the agenda during Business Illawarra’s Future of Housing Summit on February 20, which will be attended by NSW Minister for Planning and Public Spaces, Paul Scully, and Minister for Housing, Rose Jackson.
The summit, sponsored by the Housing Trust, comes three years after the organisation’s Affordable Housing Strategy, which warned the crisis was no longer just a social issue - but a threat to business growth and the region’s ability to retain key workers.
McCarthy said that prediction has become reality.
“I’ve got businesses every day that come and speak to me and say they’ve employed somebody with a particular skill set that they need, but they can’t relocate here because they can’t find a home,” she said.
She said existing staff are also being pushed out of the local rental market.
They’ve got staff that they really value who have been evicted from their rental accommodation for a range of different reasons, it’s being sold or whatever, and they can’t find another rental within the area. So they’re having to relocate to other places so they can find a home,” she said.
Asked whether housing affordability has improved since the 2023 report, McCarthy’s response was direct.
“No. Not at all.”
Employers “buying houses” to keep staff
McCarthy said housing instability has led some employers to step in as de facto housing providers.
“Some are even going to the extreme of buying houses themselves so that they can have places for people to stay.”
“It’s not big business, it’s not small business, it’s everybody.”
Warrigal aged care provides housing for up to 10 per cent of its 2,500 workforce, something CEO Jenni Hutchins says is not “cost neutral” but has helped the organisation build a reliable workforce.
Hutchins explained that Warrigal had a responsibility to provide housing for staff members on programs such as the Pacific Australian Labour Mobility Scheme and the international qualified nurse pathway, and that this provision also led to improved levels of care.
“There is a requirement, or indeed a responsibility, to provide housing for those staff for either a shorter or a longer period of time. And we do that because it enables that predictable workforce and enables better outcomes for our older people.”
Hutchins argues the region’s housing response remains incomplete without a serious pipeline for independent living and aged care infrastructure – both as a workforce issue and as a mechanism to free up housing stock.
“I never talk about residential aged care or housing for older people as care. I talk about infrastructure because the state builds schools, they often build early learning centres, they build preschools, they build roads, and local government previously built preschools, they build roads, they build playgrounds, they build pools, but they don’t build or see aged care as infrastructure,” Hutchins said.
“So we’ve got schools, universities, early learning and gyms covered. But when it comes to the voice of older people, where are they?”
Hutchins says aged care is a housing lever that is routinely undervalued in planning discussions.
“That gets missed in the continuum of housing,” she said, describing the transition from family homes to downsizing, independent living and residential care as a structural contributor to supply availability.
But she said the economics of delivery are deteriorating. Construction inflation has become a material headwind for all forms of housing – including the very projects designed to relieve pressure elsewhere.
Hutchins said a recent review by Warrigal showed construction costs had increased by around 41%.
“Residential aged care beds are unviable and not investable ... How do we find the grants and funding enabling us to build, so that we can free up stock for families and individuals to purchase?” she said.
“I’m in deep conversations with members of parliament and the government about that, because we need help to build because of those construction costs.”
McCarthy argues the cost squeeze is being amplified by the way enabling infrastructure is funded, warning that forcing developers to carry major upfront works ultimately flows through to the end price of housing. “The cost of doing business and the cost of builds is astronomical,” she said.
She pointed to West Dapto as a case study in how growth areas can stall when infrastructure responsibilities are unclear.
“The West Dapto link road is a perfect example of that,” she said.
“There’s this big picture thinking [needed] that is not just planning’s responsibility.”
The recent rezoning of 200 hectares at BlueScope in Port Kembla is the kind of clear signal and certainty business leaders have been calling for, says McCarthy, giving investors confidence that the region is serious about delivery.
She pointed to how the investment in Western Sydney Airport has turbo-charged that area.
“What we see is that investment in infrastructure, like an airport, brings confidence to businesses to invest, and our region largely hasn’t seen that level of investment. Look at the WEC [Wollongong Entertainment Centre], it still hasn’t had any money spent on it since the day it was built, and business needs that level of confidence to know that there’s going to be a return on investment.”
McCarthy said the 2026 summit will kick off a broader year-long housing agenda for Business Illawarra, including revisiting and updating the 2023 strategy.
The Future of Housing Summit will be held on Friday, February 20, at 8am. Details are here.
