Landcom will transform the former Bulli Hospital site into a new residential area after an agreement was reached to purchase the disused site from the NSW Health.

Subject to approvals, the site will deliver diverse, affordable, and sustainable housing including terraces, townhouses and a mix of single house lot sizes.

Landcom Acting CEO Matthew Beggs said the closure of the former Bulli Hospital presented an opportunity to revitalise the site by integrating a new residential area into the existing community while helping to tackle housing supply and affordability in the region.

In August 2020, health services were transferred into the new BuIii Hospital and Aged Care Centre. The NSW Government provided $37.1 million to the Centre, including $14.5 million from the Restart lllawarra Infrastructure Fund.

"Housing supply and affordability is a key issue for the region and a key feature of the development will be ensuring that a proportion of the new dwellings are set aside for workers providing essential local services such as health, childcare and retail," Mr Beggs said.

"Landcom has a proud history of creating award winning and sustainable projects and will adopt best practice for energy, water, waste and protection of the site's natural environment."

The final number of dwellings will be informed by the relevant planning controls. The planning process will consider the site constraints, local context and community feedback. This process is expected to commence in the coming months.

Landcom expects to lodge a first stage application for decommission, demolition, and site preparation in the second half of 2022 with works commencing before the end of the year, subject to approval.

The community will be consulted as the project progresses.