Corrimal station will be the first transport hub in the Illawarra to see apartments up to 24 metres high, under new planning rules announced on Monday.
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The planning changes - part of the government's Transport Oriented Development package - will allow for greater density close to 37 train stations in NSW.
Corrimal will be the first, with developers able to lodge applications under the new rules from May 13.
The applications can be lodged on the NSW Planning Portal but Wollongong City Council will retain its existing assessment powers for development applications with state government support.
Similar changes are in line for North Wollongong, while Coniston and Unanderra are under investigation after being put forward by the council.
On Monday, the State Environmental Planning Policy that governs planning controls, was amended for the 400-metre area around the first 18 of those stations, including Corrimal.
The changes will allow residential flat buildings up to 22 metres in residential zones and shoptop housing to a height of 24 metres.
They will also require at least a 2 per cent affordable housing contribution for any development with a minimum gross floor area of 2000sqm, to be delivered in perpetuity and managed by a Community Housing Provider.
The government said this rate would increase over time and reflect market conditions.
Any development applications that included heritage considerations would continue to be lodged with and assessed by councils.
"Councils are well placed to assess applications that might involve the removal of a non-contributory building to the heritage value of that area," a Planning Department statement said.
"Any new development needs to improve and enhance the heritage values of those locations."
The SEPP for North Wollongong station is scheduled to be completed in April next year.
"Housing is the largest single cost of living issue facing the people of NSW," Planning Minister and Wollongong MP Paul Scully said.
"These reforms are a critical part of our plan to deliver more homes as we confront the housing crisis.
"Though this SEPP, there is the capacity to deliver an estimated 170,000 more well-located, well-designed and well-built homes throughout Sydney, the Illawarra, the Hunter and Central Coast.
"The extensive consultation has been an important part of developing the settings to help deliver more housing in well located areas, around transport hubs, close to services, jobs and amenities."