Creating a large social housing developments is a mistake, according to NSW minister Gareth Ward.
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The Families, Communities and Disability Services minister, Mr Ward is in charge of the Social and Affordable Housing Fund.
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Part of that fund has been used to partner with Uniting on a 78-unit expansion of its Shellharbour facility.
Among those 78 new units are a number of social housing units.
Mr Ward said including the units in with those of self-funded residents was a better approach than consigning them to a separate development.
There are a lot of people suffering housing stress around the state, particularly older Australians.
- Uniting's Simon Furness
"In the past governments have made mistakes around clustering, and I don't support clustering of social housing," Mr Ward said.
"The way I want to make sure we deliver these products is 'pepper and salt' - integrated - so you create virtuous cycles rather than vicious ones."
Mr Ward said the social housing units were focused on helping a particular group of people.
"We're specifically targeting a very vulnerable group here - 55 years and older," Mr Ward said.
"Often at that age things go wrong. Divorces occur, people pass away and vulnerabilities are heightened so it's really important that we provide specific accommodation targeting people in that position that may be vulnerable."
The social housing properties in the development were all one-bedroom units.
Uniting's Director of Property and Housing Simon Furness agreed with Mr Ward's desire to avoid creating clusters of social housing units.
"What we try and do in Uniting is incorporate affordable housing in our new developments rather than specifically provide affordable housing in one place," Mr Furness said.
"There are a lot of people suffering housing stress around the state, particularly older Australians, older women especially. There's a growing need for affordable housing for older women."
Mr Furness said the latest stage in the Wallaroo Drive development took the total number of units to 103.
"This part of the site has been vacant for a number of years until market demand had grown and we've now built these additional 78 units," Mr Furness said.
The latest stage of the development was finished in September and 50 of the 78 units are now occupied.