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January 22, 2026 — 5:00am
The residents of 80 small flats in a modest apartment block known as the Chimes, in the inner Sydney suburb of Potts Point, have long been as eclectic as the streets that surround them. But the 1960s building is not long for this world, and the people who call it home face an uncertain fate.
Shortly before Christmas, the NSW government approved a $91 million proposal from Melbourne developer Time & Place – which is backed by billionaire James Packer – to bulldoze the ageing 10-storey building and replace it with roughly 34 apartments in a luxury development up to 13 storeys.
Furore over the Chimes revamp reflects community concern over the trend of replacing Sydney’s smaller, lower-cost units with fewer, larger apartments. It often means booting residents from their homes, pricing them out of the suburb, reducing housing diversity and turbocharging gentrification.
Given NSW’s biggest and most pressing need is a lack of affordable housing, all of this raises the question: Why is the state government, which is bent on increasing density yet falling far behind its target to deliver 377,000 new homes by mid-2029, approving projects that will deliver fewer homes?
The trend has been most pronounced in the eastern suburbs, where developers can turn the biggest profits from luxury rebuilds. In Paddington, developer Toohey Miller is proposing to turf residents from a three-storey block of 27 studio apartments and several townhouses to make way for a $78 million complex of 40 residences on Oxford Street, opposite the Victoria Barracks military base. About 10 of the new homes would be affordable housing units offered at below-market rent for 15 years.
The phenomenon is not new. A grassroots campaign led by Potts Point residents, incensed by the homes being lost to development, spurred the City of Sydney Council in 2023 to propose changes to its planning controls to prevent new residential buildings that led to a significant drop in the number of dwellings.
Those changes, which came into effect in May, limit the loss of homes to 15 per cent – or one dwelling, whichever is greater – when an apartment or mixed-use complex is redeveloped. They were not retrospective in the case of the Chimes building.
Woollahra Council is considering local planning controls that mimic the City of Sydney’s “no net dwelling loss” provisions; nearby Waverley Council has previously explored similar changes.
Woollahra recently said the “process of net loss” undermined its efforts to reach its target to 1900 homes by 2029. Its own analysis showed it received 42 development applications that resulted in net dwelling loss – representing as many as 93 homes lost – in the five years to January 2025.
The developers behind the Chimes and Paddington proposals both leveraged the state government’s affordable housing incentives, which means they can build bigger developments if they dedicate at least 15 per cent of their projects to so-called “affordable housing” for at least 15 years. It also means the projects are considered “state significant development”, enabling the government to override local council planning rules.
The government might argue that, once its policy reforms are in place, the market should decide where homes are built, or that larger developments elsewhere are levelling the ledger in terms of housing supply. It’s true, too, that Sydney does need more three- and four-bedroom apartments.
Developer lobbyist Tom Forrest of the Urban Taskforce previously described the dwelling loss issue as “confected” and said preserving run-down blocks for affordable housing was a “failure of policy”.
But it’s difficult to see how approving developments that will result in fewer dwellings passes the pub test in a housing shortage.
Sydney MP Alex Greenwich described the approved revamp of the Chimes as a “heartbreaking failure of our planning system” and a “wake-up call” that should motivate stricter development guidelines.
“At the height of a housing affordability crisis, we are losing key worker and affordable housing rentals, and evicting from Sydney the people our city needs to thrive, and for what? To allow their millionaires to buy their second or third property.”
Greenwich said the project’s approval “must provide a mandate for stronger planning laws to keep our city’s homes affordable for workers and renters.”
Planning and Public Spaces Minister Paul Scully has the power to update state planning guidelines with “no net dwelling loss” provisions – which would go a long way to remedy the problem.
Asked in November whether he would consider statewide changes modelled on those being eyed by local governments, Scully said the net dwelling loss issue could be “particularly localised” and warned “some councils use some of these mechanisms to curb supply rather than encourage it”.
“We have to make sure that some of these changes, when introduced, do not have a chilling effect, or an anti-supply effect, in terms of increasing the overall level of supply.”
Premier Chris Minns’ administration came to power declaring war on local councils who stood in the way of plans to increase housing stock. He has made the case that recent planning reforms – which received bipartisan support – to encourage more well-located housing were necessary to prevent young people being priced out, and Sydney becoming a “city without grandchildren”.
This argument has hinged on an assurance that any perceived negatives of hiking density – like changes to the look and feel of suburbs, or construction noise – will be outweighed by the positives, such as better options to downsize, children being able to live nearby, and more vibrant suburbs.
Sydney’s gradual shift towards accepting more development is fledgling and fragile in many areas.
If the government is seen to be giving developers a better deal than residents who need somewhere affordable to live – without significantly moving the needle on the state’s lofty housing targets – it risks losing the social licence it needs to reshape Sydney’s streets and deliver critical homes.
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