More than half a billion worth of affordable and social housing will be built in NSW by the non-for-profit sector over the next three years, with the inner west and Canterbury-Bankstown the greatest beneficiaries.

While experts say having more than 1400 homes in the construction pipeline is a positive, it remains little more than a “drop in the ocean” when it comes to Sydney’s housing woes.

Since 2012, almost 1300 properties have been built or acquired by the state’s 18 largest community housing providers (CHPs), which are set to buy or build an extra 1404 homes by 2020, the NSW Community Housing Industry Snapshot released on Monday shows.

Canterbury-Bankstown and the inner west will see the biggest boost of social and affordable housing, followed by Penrith, where rental applications are currently flowing in for the newest project, Harts Landing – a 268-apartment development set to open next month.

While key workers are fleeing Sydney’s inner and middle ring suburbs for the city’s fringe, people there are also struggling.

Despite being 55 kilometres west of the central business district, Penrith is home to a substantial amount of people in rental stress – with almost 24 per cent of tenants spending a third or more of their income on rent, according to latest census figures.

“There is not only a need [for affordable housing] across all of metro Sydney but in the regions as well,” said Andrea Galloway, chief executive of Evolve Housing, the CHP which built the project with developer Payce.

“We’re seeing the social housing waitlist grow, in part because there is not enough affordable housing to assist those who are borderline being placed into housing stress and homelessness due to the [expensive] private rental market.”

Sydney will chew up the bulk of what’s in the construction pipeline, with 96.5 per cent of the properties to be built in the greater metropolitan region.

“Housing affordability is a huge issue in Sydney and more councils are focusing on inclusionary zoning,” Ms Galloway said.

It’s a welcome boost to supply, but the construction of affordable housing isn’t moving fast enough, NSW Federation of Housing Industry chief executive Wendy Hayhurst said.

“It’s a drop in the ocean but we’ve proved it can be done, we’ve proved people do like living in affordable housing,” she said.

Even when combined with the 26,900 social and affordable homes to be acquired or built by the state government over the next 10 years, the supply will fall short of demand.

An estimated 4900 dwellings are needed each year, or some 100,000 dwellings over 20 years(link is external), to meet the demand as our population grows.

Ms Hayhurst said subsidies, either through government grants or the supply of land, were key to enabling CHPs to contribute more stock.

“There is no magic bullet,” she said. “At a federal government level we need to have some form of tax break, or subsidy.

“The other type of investment is land. If you looked at the cost of development, the value of land is what is really making development very expensive. If you factor in discounts on government land we can do so much more.”

Ms Galloway said Harts Landing was only possible because Evolve was able to purchase the site off the government for about 30 per cent below market value.