Premier Chris Minns says Sydney’s NIMBY instinct has re-emerged as the state has progressed from planning reforms to physical developments, as he announced a policy requiring councils to maintain at least 30 years’ worth of zoned and commercially feasible housing.

Minns announced the policy in a lunchtime speech on Wednesday, saying it would deliver a long-term pipeline of housing while preventing “cynical councils paying lip service to governments and stakeholders and residents”.

The latest planning reform comes as NSW grapples with sluggish housing supply and falls further behind the commitment to build 377,000 homes by July 2029.

Minns said there had been a marked shift away from anti-development rhetoric, and finding someone opposed to more housing supply was increasingly difficult. However, he said latent opposition to greater density was re-emerging as the state government’s planning reforms progressed.

“But as we progress from theories to plans to actual developments, we have regrettably seen a re-engagement with that NIMBY instinct,” Minns said at the CEDA State of the State event.

“But this is exactly the time that we need to hold our nerve because we can’t go back to the old days.”

As he outlined the reforms, the premier acknowledged his government could not claim to have solved the housing crisis.

Minns’ announcement adopted a recommendation from a Productivity Commission report released earlier on Wednesday. The 70-page report argued the state’s feasibility crisis – with apartments now costing more than $1 million to build – could be resolved by making zoned land more economically feasible.

It found less than a quarter of council-zoned land was commercially viable to develop, noting 80 per cent of residential land within 10 kilometres of the Sydney CBD has council zoning of just one to two storeys.

The policy would require councils to update their local strategic planning frameworks to continually identify and maintain three decades’ worth of feasible housing capacity in their local government areas, Minns said.

“In other words, it will stop more cynical councils paying lip service to governments and stakeholders and residents about mandates and accepting new housing, while artfully rezoning parts of their local government area, knowing that at the end of the day, it will never economically stack up to build there,” he said.

The policy would allow households, builders and councils to make long-term plans about their communities, Minns said, “moving us away from the boom-bust cycle that’s characterised the housing market”.

“It’s also a message to the city and state that when it comes to housing, the government is not backing down,” he said.

“We’ve got to keep building, and the reason we have to keep building is that so future generations won’t feel compelled to pack their bags at the prime of their life and leave Sydney or other parts of NSW to somewhere else.”

Urban Development Institute of Australia NSW chief executive Stuart Ayres said the Productivity Commission report recommending the policy was solely focused on increasing planning capacity, rather than reducing the underlying cost of housing.

“The solution to our housing supply crisis is not to simply build more apartments in Sydney’s highest-cost locations that most people cannot afford,” he said.

A Q&A session with Minns was disrupted after two activists stormed the stage, protesting the state government’s record on climate change.