Wagga City Council's manager of city strategy Tristan Kell says NSW giving two-storey housing a planning approval fast track has provided a growth opportunity for the city.
Mr Kell's comments were in response to some residents who raised concerns that the Low Rise Housing Diversity Code would limit the ability of neighbours to object about potential loss of sunlight and privacy.
Mr Kell said the housing code, which came into effect across the whole state this month, had already been applied to Wagga for the past two years with "no issues".
"In the short and medium term, I think Wagga has got a real opportunity to leverage from this current economic situation," he said.
"What we are seeing is more millennials moving to regional areas; millennials have different housing needs to the traditional housing market and we need to respond to that to ensure Wagga's population continues to grow over the next 20 years.
"We are not going to see the same types of migration that we have in previous years so it is important that we're flexible and agile enough to respond to this challenge from COVID-19."
The new code makes it faster and cheaper to build "dual occupancies, manor houses and terraces" via an alternative to the development application process.
Proposed buildings within certain parameters, such as a maximum height of 8.5 metres, will qualify as a "complying development" in R1, R2, R3 and RU5 zones where permitted by a council.
Forsyth Street resident Margaret Whalan has said she and her husband Bill did not imagine that 18 years after they moved in, their house and backyard would be overshadowed by a new two-storey unit block in 2017.
Mr Kell said the code was "quite strict" on which buildings would qualify, which would only be a "small portion" in Wagga, and anything outside the parameters would have to go through a development application.
"Wagga has a Local Environment Plan that allows this type of development to occur in our growth areas and developers have taken advantage of it, particularly in those areas, and we haven't seen any issues," he said.
"It's important to note that this cannot occur in our CBD, in central Wagga, because of constraints around flooding and heritage.
"Now that the levee is complete we will be able to see sites like Eric Weissel Oval be able to benefit from this form of housing."
A spokesperson from the NSW Department of Planning previously said faster approvals for "well-designed homes" would encourage "more housing diversity", improve housing affordability and create jobs across the state.