Government-backed pre-sales: the quiet fix for stalled apartments.
Western Australia has opened a $250 million apartment Pre-sale Guarantee. At first glance it sounds like the government agreeing to buy apartments developers can’t sell. The reality is more interesting — and for Sydney owners, investors and developers it matters, particularly across the Eastern Suburbs property market, because NSW is already running the same play with $1 billion behind it.
Why pre-sales stall good projects.
Apartment developments are funded differently to an ordinary house purchase. Before a bank commits substantial construction funding, it normally wants a set percentage of the project’s expected revenue covered by qualifying pre-sale contracts — protection if the market weakens during construction. The requirement is sensible, but it creates a circular trap.
A developer may hold development approval, a builder ready to commence, equity in the project, a viable feasibility and genuine buyer interest — and still be refused funding because not enough contracts are unconditional. The guarantee is designed to bridge exactly that gap: the government’s purchase contracts can be recognised by the senior lender as qualifying pre-sales, and construction starts.
The valuation discipline is the key
The government does not pay the developer’s advertised asking price. The purchase commitment is set against an independently supported market valuation, less a mandatory discount — at least 10% in metropolitan Perth and Sydney-equivalent settings, 7.5% in regional WA. The developer keeps marketing every apartment privately at full price; if a private buyer signs, the government contract is rescinded. The discount makes the government the buyer of last resort, never the buyer of first choice.
Two states, one strategy.
Western Australia is following a path NSW opened with its 2025–26 Budget. The mechanics are strikingly similar — independent valuation, a mandatory discount, rescindable contracts — with the main differences in scale and caps.
| Setting | NSW — Pre-sale Finance Guarantee | WA — Pre-sale Guarantee (Keystart) |
|---|---|---|
| Program size | $1 billion | $250 million |
| Cap per project | $50M standard · up to $80M affordable | $50M |
| Share of homes | Up to 50% · 75% under 20 homes · 100% for community housing providers | Assessed per project; can include non-affordable homes where the financing structure requires |
| Minimum discount | 10% below independent valuation (affordable homes excluded) | 10% metro · 7.5% regional |
| If a private buyer signs | Government contract replaced | Keystart contract rescinded |
| Status | Running — roughly 1,300 homes supported | Applications opened 8 October 2026 |
Program settings summarised from published government and Keystart material and subject to change — developers should confirm current conditions, including each scheme’s affordability requirements, directly with the administering agency before structuring a project around them.
A fallback buyer, not a blank cheque.
Keystart enters off-the-plan contracts over selected apartments in an approved development — at the discounted, independently supported valuation, with no deposit paid.
Those contracts can be recognised by the project’s financier as qualifying pre-sales — often the last piece needed before construction funding goes unconditional.
Every committed apartment must still be marketed privately through construction. A private sale at full market value rescinds the Keystart contract.
Whatever remains unsold at the nominated date, Keystart buys at the contracted discount — a commitment running to around 12 months after practical completion.
This is not a rescue package for unviable projects. Up to $50 million is available per development from the $250 million pool, and every project must still satisfy planning, financing, valuation, builder, developer and feasibility requirements. The scheme targets developments that are essentially ready to proceed but stuck at the pre-sale hurdle.
Two details deserving close attention
The affordability condition has softened. Early program material indicated at least 30% of a project’s dwellings would need to sit below Keystart’s affordable price threshold; more recent application documentation requires only that a project contain a portion of affordable dwellings — and Keystart can also contract on more expensive apartments where the financing structure requires it. That makes this a housing-supply and development-finance tool, not just an affordable-housing subsidy. Developers should confirm the current requirement directly with Keystart.
And read the price mechanics in the final documents. If the contracted purchase price is fixed when construction funding is arranged, developer and lender gain a clear floor under the residual stock. If any circumstances allow a revaluation before settlement, the protection is less absolute. The contract wording matters as much as the headline $250 million.
NSW isn’t proposing this. It’s already doing it.
The NSW Pre-sale Finance Guarantee has been running since the 2025–26 Budget, with roughly 1,300 homes supported and more applications under assessment. The projects it has touched are not hypothetical — they are on Sydney streets now.
The former Balmain Leagues Club site — the program’s first marquee deal, unlocking a long-stalled inner west project.
A major city-fringe project supported under the scheme as it moves toward delivery.
Half the apartments guaranteed in a $44.5 million project with a substantial affordable component.
A small Eastern Suburbs infill project — proof the tool reaches boutique developments, not just towers.
Why does this matter here? Because Sydney’s housing-supply problem is not solved by rezoning alone. Planning authorities can approve height and density — as they are doing right now in Bondi Junction and across the Eastern Suburbs — but the apartments still have to be financially viable to build. Construction costs, finance costs, taxes, planning delays and lender pre-sale requirements can all stop an approved project from commencing. A relatively small number of government-backed contracts can unlock a much larger development: guarantee a portion of a 100-apartment project and all 100 homes can reach the market, even if the government ultimately buys few of them — or none at all.
Three things decide whether this works.
The apartments must be valued realistically, not against optimistic developer expectations. The mandatory discount only protects taxpayers if the base valuation is honest.
Support should flow to developments that are fundamentally viable and capable of proceeding quickly — the scheme bridges a finance gap; it cannot manufacture feasibility that isn’t there.
Developers and construction lenders need confidence the guarantee remains enforceable when it is actually required. A guarantee that can shift before settlement is worth less than its headline.
If those safeguards hold, pre-sale guarantees address one of the least visible barriers to apartment construction — the gap between obtaining planning approval and obtaining the finance to actually build. For Sydney owners thinking about selling a property with development potential, the financing environment can materially affect who can buy and what they can pay. Where governments are proposing significant density increases across established suburbs, that may prove just as important as the planning reforms themselves.
Approvals don’t build homes. Finance does.
I have watched Eastern Suburbs development sites trade through every cycle since the mid-1980s. If you own a potential development property — or you’re buying property off the plan in a project that might lean on one of these guarantees — I’ll help you understand what it really means for value and risk. If you want to understand what a development site or existing property may be worth in the current market, request a property appraisal.
These schemes are cleverer than the headlines suggest. The government isn’t propping up prices — the mandatory discount means it buys below market or not at all, and the developer stays motivated to find real buyers at real prices. What the guarantee actually sells is certainty, and certainty is what construction lenders price hardest. Watch the valuations and the contract wording; if those stay honest, this is the rare housing intervention that could move supply without distorting the market it serves.
Sources: WA Government media statements (April and October 2026) and Keystart Pre-sale Guarantee program material; NSW 2025–26 Budget and NSW Pre-sale Finance Guarantee program reporting, including supported projects at Rozelle, Pyrmont, Moorebank, Kingsford and Westmead. Program settings summarised as published and subject to change; confirm current conditions with the administering agencies. Independent property commentary — not financial, legal or development advice.
