The growing build-to-rent sector would help rental affordability in the Illawarra, a property expert says.
Build-to-rent developments are purpose-built for rental use, usually at market rates.
Owners include insurance companies, super funds, private equity firms or developers.
Build-to-Rent in Australia: Product feasibility and potential affordable housing contribution, a report prepared for the NSW Government by UNSW City Futures and Macquarie University, was published this week.
The report is positive regarding the benefits to be gained from a thriving build-to-rent sector, including its contribution to housing diversity.
Colliers International Wollongong director Simon Kersten said it was becoming increasingly difficult for many to own a home, meaning there was a much bigger pool of people who will likely rent for their entire lives.
Mr Kersten said when a property was built specifically to rent, it was cheaper than building it to sell.
"This is because you're not strata titling it, you're putting in different facilities and amenities," he said. "It definitely makes it more affordable.
"(It would be) ten to 20 per cent cheaper in construction or the total cost of ownership, and that should be passed down into the rentals.
"By having more of these (properties), there's more availability in the market, and having more stock in the market naturally drives prices down as well. And if you're building it cheaper, you can rent it cheaper."
There are reportedly developers who are currently deciding whether their Wollongong projects will be for sale or rent.
For example, the Mercury understands a planned future development on Kenny Street, Wollongong could be entirely comprised of build-to-rent.
The report also makes clear what needs to be done if both 'market' build-to-rent and an affordable rental component are to be secured.
As well as levelling the playing field with other 'market players' on 'development taxes and ongoing levies', to get the all-important affordable element the report says governments need to provide some additional support.
The report also demonstrates the advantage of using not-for-profit community housing providers to deliver the housing.