The NSW government has set Newcastle council a target of doubling its housing completions over the next five years in return for more infrastructure spending.
Premier Chris Minns announced the state's new "incentive program" at a function in Sydney on Wednesday, saying 43 Sydney, Newcastle, Central Coast and Wollongong councils which "drive more development will also receive more funding for schools, hospitals and roads".
The five-year target for Newcastle is 11,100 house completions by 2029, more than double the 5316 completed in the local government area in the five years between 2017 and 2022.
The target for Lake Macquarie is 8000, Maitland 5300, Cessnock 3900 and Port Stephens 2100.
The Lake Macquarie and Cessnock targets are about 30 per cent higher than their 5986 and 2894 completions respectively from 2017-2022, while the targets for the two other Lower Hunter councils are similar to the previous trend.
The Port Stephens target is the lowest among the five Lower Hunter councils, but the Port Stephens Council draft housing strategy says the area has "limited opportunity for new housing developments".
The Newcastle and Lake Macquarie targets are ambitious given the rising materials and construction costs weighing on the property industry, above-average inflation and high interest rates.
The NSW government announced last week that it would lead four high-density rezonings in the Broadmeadow "place strategy" area which could supply up to 3200 new homes.
The government's 2.6-hectare Honeysuckle HQ redevelopment site on the Newcastle waterfront also has the potential to provide hundreds of apartments on publicly-owned land.
The Hunter Central Coast Regional Planning Panel approved Winten Property's controversial Minmi Estate in March, a massive subdivision which could add 858 houses to Newcastle's western fringe and another 1070 lots in Lake Macquarie City Council area.
The Newcastle Herald understands the new state housing target for Newcastle is more than double the target the Greater Cities Commission handed to the government in October.
The government has since scrapped the commission as Premier Chris Minns and Planning Minister Paul Scully have set about removing the barriers they say are holding up residential development.
The government's "transport-oriented development" program will override council planning rules to allow eight-storey apartment buildings close to Cockle Creek, Cardiff, Woy Woy, Newcastle, Hamilton, Adamstown, Kotara, Teralba, Booragul and Morisset train stations and 27 others in Sydney and the Illawarra.
Mr Minns said the government would tie $200 million in Accelerated Infrastructure Fund spending to the local government housing targets and reserve $1 billion in developer contributions over 10 years for new schools, hospitals and roads.
"Meeting and beating the housing targets will automatically translate to greater funding support," the Premier said.
The government will also publish a league table comparing key areas of councils' planning performance.
Newcastle council received $7.6 million from the fund to help upgrade part of Minmi Road in the weeks before last year's NSW election but continues to call for more spending to unlock housing supply.
The council resolved on Tuesday night to undertake an "urgent" traffic investigation on the operation and capacity of Minmi Road, including potential funding mechanisms, to "service current and future populations across a range of transport modes".
The Property Council has called this week for the state government to include funding to extend light rail and move Newcastle Harness Racing Club in next month's budget to unlock housing supply at Broadmeadow.
Property Council Hunter director and NSW deputy executive director Anita Hugo said in a column for the Newcastle Herald that funding remained a "critical obstacle" to the Broadmeadow strategy's "eye-watering" requirement of more than $3 billion in enabling infrastructure over 30 years.
The government is focused on "in-fill" development in existing suburbs rather than the sprawling western Sydney council areas.
"One of the reasons housing targets have failed in the past is that we have placed an enormous burden on western Sydney without the infrastructure to support it," Mr Minns said.
"We've asked local councils to pick up the slack, to maintain the roads, to provide the parking, to make sure services are there for entire new communities."
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