From January, first home buyers can choose between paying stamp duty once or opting into an annual tax, paying $400 and 0.3 per cent of the land's value.

The government has budgeted $728.6 million for the scheme over four years, with plans to introduce legislation later this year and give first home buyers the choice by January 16.

First home buyers can opt for the tax on properties up to $1.5 million and the property won't be locked into the tax if sold.

Existing stamp duty exemptions for properties under $650,000 and concessions for properties under $800,000 will remain available.

Opposition Leader Chris Minns says the government is hiding behind first home buyers to introduce its coveted land tax.

"If you're going to put money on the table for first home buyers, why introduce a brand new land tax system for NSW, one we've never had before, rather than just extending exemptions?"

Shadow Treasurer Daniel Mookhey said the policy should have been taken to the election.

"This is going to be an incredibly complicated change to NSW tax law," he said.

"It's a precursor to the introduction of a broad based land tax across all residential properties, and it's taking place before the election."

Treasurer Matt Kean said the reform would make property more accessible.

"More NSW residents will get into their first home at an earlier age," he said.

The optional land tax policy is part of a broader $2.8 billion package to address housing affordability.

Big ticket items include $780.4 million to trial a shared equity scheme, under which the state government would take a stake in up to 3000 homes a year.

The two-year trial will be open to first home buyers who are nurses, teachers or police officers, as well as single parents and singles over 50.

Homes valued up to $950,000 in Sydney and select regional centres and $600,000 in other regional areas will be eligible.

The government will take a stake up to 30 per cent for existing properties and up to 40 per cent for new properties.

Some $300 million has been earmarked for councils to invest in the infrastructure needed for a growing population, including roads, sewers and parks.

Other money will go towards upgrading social housing, rezoning land for more development and ensuring housing supply in regional areas.

"This package is about not only supporting first home buyers but also putting in place the right framework to increase housing supply and deliver more social and affordable housing," Mr Kean said.

The budget has allocated funds to upgrade more than 16,000 social and Aboriginal housing properties, but only plans to build 320 new ones.

Previously the government upgraded some social housing while selling others to pay for it.

"We're increasing the amount of social housing available by not reducing it to pay for maintenance and ongoing work," Mr Kean said.

With a social housing waitlist exceeding 50,000, the government has fallen "desperately short of what our state needs," Community Housing Industry Association NSW policy head Caitlin McDowell said.

Greens MP Jenny Leong said renters were once again left behind and announcements on social and Aboriginal housing were "breadcrumbs".

Australian Associated Press