Record spending on social housing has been included in an otherwise tight NSW budget, but advocates say years of investment will be needed to address the urgent need.
Tuesday's state budget - Labor's second since taking power in 2023 - features $6.6 billion in funds for social housing and homelessness services.
The affordability and availability of homes was the "biggest single pressure facing the people of NSW", Housing Minister Rose Jackson said.
"Nothing is more important than a roof over people's head," she told parliament.
The largest social housing investment in NSW state history will fund 8400 social homes, 6200 of them new and the rest knock-down rebuilds.
A $1 billion maintenance blitz will refresh 33,500 others.
At least half the new homes will be for people fleeing domestic and family violence.
More than 5000 women and children were yet to find a permanent home due to falls in social housing stock since 2011, Treasurer Daniel Mookhey said in his budget speech.
"To fix one person's house, the previous government's preference was to sell another's," he said.
Housing advocates have urged the government to plunge funds into arresting a long-term decline in stocks during a period of consistent population growth.
Tuesday's plan was an admirable attempt to bend a catastrophic trajectory, McKell Institute chief executive Ed Cavanough said.
"If the government failed to take urgent action now, NSW would become an entirely different society within a decade," he said.
Budget funds for struggling homelessness services, worth some $520 million, did not go far enough, Homelessness NSW chief executive Dominique Rowe said.
"Services are really at the brink and need as much support as they can get," she said.
While it would take years to build new homes, the maintenance program would increase supply for 58,000 people on waiting lists for social housing, she said.
Opposition Leader Mark Speakman said prioritising social housing came amid lower capital project funding in the budget more broadly.
The budget includes $520 million in infrastructure spending to support higher densities in eight priority precincts around train stations and metro stops.
A $200 million carrot will also be offered for councils that meet their housing targets after some dug their heels in following a state push to lift the delivery of new homes.
Separately, the government expects to raise about $1.6 billion over four years when it stops indexing land-tax thresholds for investors and businesses.
The funds are earmarked for the housing crisis, but critics argue more than two million renters will be worse off when landlords are hit with larger tax bills.
"The last thing you do in a housing crisis is discourage people from investing in property ... the people who ultimately pay are the small businesses and the residential renters at the end of the line," Mr Speakman said.
Stephen Fenn, the chief of developer lobby Urban Taskforce, said the government risked killing off the "goose that lays the golden eggs" in a property sector that accounted for a large part of state revenue through taxes and transfer duties.
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