Management of properties in the Shoalhaven, Northern Sydney, Mid-North Coast and New England will be passed over to not-for-profit organisations from 2017.

Housing Trust CEO Joan Ferguson welcomed the opportunity to take over the management of South Coast properties but said she was “perplexed” as to why a larger region like the Illawarra was not included.

“The Illawarra really needs an injection of funds around improving the conditions of property, increasing tenant satisfaction for maintenance and generally providing better outcomes,” Ms Ferguson said.

The transfer means housing providers may be able to use new income raised, or potentially borrow against it, to build extra social and affordable housing dwellings.

Ms Ferguson said housing affordability was a serious issue in the Illawarra and more and more people were being pushed to rely on social housing.

She gave the example of house-and-land packages in the once affordable West Dapto going “gangbusters” and now out of reach for many average income-earners.

“As more people can’t afford to buy more people need to rent, so rents goes up and more people earning the lowest wages need to rely on the social housing system,” Ms Ferguson said.

Current wait times for a two-bedroom property under social housing in Shellharbour and Kiama is more than 10 years, and around five to 10 years for Wollongong and Helensburgh.

Minister for Social Housing Brad Hazzard said the reform aims to improve services for tenants and ensure more money comes in, to provide supports for social housing tenants.

"Community housing has shown it is innovative and can help vulnerable tenants to achieve positive outcomes such as securing employment and education," Mr Hazzard said.

The transfer will take the proportion of social housing managed by community providers from about 19 per cent to just shy of the 2009 target of 35 per cent.