The state government has announced plans to build 6000 new homes in North Parramatta as part of a $2.1 billion urban renewal project.
The project will be built on a 146-hectare parcel of government-owned land between the Parramatta River and Collins Street.
Over the next 15 to 20 years, apartment blocks as high as 30 storeys will be built on the site, which is home to a cluster of heritage buildings.
NSW Premier and Minister for Western Sydney Mike Baird said: "The Parramatta North precinct is home to some of the state's – and indeed Australia's – most important heritage locations and assets, including Australia's first farm and first water mill, Parramatta Female Factory and the Old Kings School."
Mr Baird declared Parramatta North a "state significant site", which will allow "fast-tracking the delivery of thousands of new homes and jobs, providing a major economic boost for western Sydney".
It is understood that the government will sell off building sites to private developers who will have to operate within the parameters of a development control plan.
Mr Baird said heritage experts will guide the government to "ensure that the most significant buildings are preserved" and assist in finding "appropriate adaptive reuse for these buildings".
The facilities at Cumberland Hospital will evetually be vacated but it has not been announced when this will occur.
The development will also include improvements to parklands.
Bronwyn Evans, who leads a group concerned about the impact of the WestConnex motorway on traffic around Wentworth Point, is also concerned about traffic congestion around Parramatta due to the influx of new residents.
"The government needs to adopt a much more holistic planning approach rather than just a knee-jerk plan 'let's do some houses'," she said. "There's no infrastructure in the whole Homebush-Parramatta area so it's a really big deal.
"They think the WestConnex is going to solve everything, and it's just not."
In 2013 then planning minister Brad Hazzard released a draft of the Sydney Metropolitan plan, which was designed to provide guidelines for providing infrastructure to large-scale projects such as this.
The plan was due to be completed by the end of last year.
Mr Baird would not comment on whether the project would fall within the guidelines of the proposed plan or when the final plan would be released.
When asked about the potential impact on property prices, Starr Partners chief executive Douglas Driscoll said despite the huge number of homes in the pipeline, the project was unlikely to depress property prices.
"With big projects like this there is the risk that it will dilute prices," he said.
"But the demand for Parramatta is so high that I think prices will remain in line with growth in the area."
Mr Driscoll said that 70 to 80 per cent of the sales made by Starr Partners' North Parramatta office were to investors.
And the fact that the 6000 residences in the pipeline are new homes means they can be purchased by offshore buyers.
"A very large percentage of those properties will be bought by overseas investors, primarily from mainland China," Mr Driscoll said.
A building boom is under way in Parramatta at the moment with $8 billion worth of residential and commercial development in the pipeline.