Sites in Lake Macquarie and Wollongong, to the north and south of Sydney, have been selected for the installation of modular houses under a NSW-government led pilot scheme.
But officials are still working through regulatory barriers for modular housing, which has not been rolled out at scale in the state before.
Premier Chris Minns says people are under pressure due to the housing shortage and "non-traditional methods" are needed to deliver more homes sooner.
Chris Minns says people should be allowed modular dwellings in their backyards. (Bianca De Marchi/AAP PHOTOS)
He hopes the trial will prove modular housing is deliverable at scale and overcome obstacles preventing wider adoption as the government targets an extra 8400 social homes.
"There are still councils in metropolitan Sydney that won't allow modular housing, notwithstanding the fact that we clearly have a housing crisis right across the state," Mr Minns told reporters on Monday.
Hi-Tech Modular Homes general manager Rex Ratnam said buildings could be pre-fabricated off site and installed within two days.
"I don't want to ... bag councils," he said.
"Metropolitan councils are a lot (more) difficult to work with than the regional, country councils."
Research from the University of NSW and University of Technology Sydney found there was nowhere in the capital where someone on the state's median full-time income relying only on their salary could afford to buy a property.
Housing would remain unaffordable for many, with income supplements, existing wealth and sizeable cash injections from family needed to purchase a home and service a mortgage, the research published on Monday found.
Mr Minns said modular housing would primarily play a role in the quick delivery of freestanding homes in newly developed suburban-style settings, but it could also help with inner-city infill.
People should be allowed modular dwellings in their backyards, allowing downsizing parents to cede the larger residence to children, he said.
Modular buildings can be pre-fabricated off site and installed within two days. (HANDOUT/QLD DEPARTMENT OF THE PREMIER AND CABINET)
"And if that's being blocked by the local council, well that's a big problem," Mr Minns said.
Meanwhile, business groups, universities and unions in the Housing Now alliance are calling for the appointment of a NSW co-ordinator-general to help deliver new homes.
"A dedicated housing co-ordinator would cut through swathes of red tape, compel government agencies to address issues and inform cabinet on how to progress major housing projects stuck in the planning system," group chair David Borger said.
The recommendation is one of 10 the alliance has made in its 2024 policy platform, launched on Monday.
Other policies include rezoning to allow housing to be constructed at places of worship, alternative planning pathways for university accommodation and better security for renters with an end to no-grounds evictions.
Several policies in the alliance's previous proposal had been adopted, Mr Minns said, and more were welcome.
"If people have got ideas or initiatives to speed up housing in NSW, we will grab it, we will steal it and I think we've shown in the past we will implement it," he said.
The government has committed to ending no-grounds evictions but the premier has acknowledged it's easier said than done.
