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NSW President’s report

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The first quarter of 2024 has continued to present significant challenges to the residential construction sector.

Gary Walker

HIA NSW President

Cost-of-living pressures, increased business costs, and government regulatory burdens show no signs of abating. In NSW, the NCC2022 energy requirement via BASIX is starting to impact new builds and renovations with significant cost increases, and many members are facing difficulties in meeting the requirements. As I reported last year, HIA was able to gain a reprieve for projects where building contracts were signed before 1 October 2023, allowing the former BASIX targets to be used on these eligible contracts. However, the NSW Planning Minister imposed a deadline of 30 June 2024 on these contracts.

Why is this an issue? The delays in providing the necessary infrastructure to new housing lots mean that many of these contracts are on unregistered land. And thanks to the inflexibility of the NSW Planning Portal and some council policies, you can’t get a BASIX certificate on unregistered land. We estimate some 3,000 contracts could be impacted. I am pleased to report that following significant lobbying by HIA NSW, the NSW BASIX transitional arrangements will be extended for three months to 30 September 2024 - a win for at least half of those eligible contracts in the system.

NSW land prices continue to rise disproportionately compared to other states, exacerbating the housing affordability issue in this state. Data from the HIA-CoreLogic Residential Land Report for the September 2023 quarter show that Sydney median lot prices came in at $661,250, almost double the national average and around 57 percent higher than Melbourne. Regional NSW median lot prices were $350,000, higher than many other capital cities such as Brisbane, Adelaide, and Perth.

The NSW Government needs to focus on measures to urgently unlock more shovel-ready land across the state and ease the pressure on spiralling land prices and housing affordability. This means faster approval times and urgent delivery of critical infrastructure.

These issues now place NSW in the unenviable position as Australia’s least affordable state for housing. According to the latest HIA Affordability Report, it now takes 2.5 median incomes to service a typical mortgage in Sydney and 2.3 median incomes in regional NSW.

The report also shows that first-home buyers in NSW need around 10 years to save for a deposit based on average weekly earnings data. Removing roadblocks and faster delivery of new housing is the only way to arrest this trend.

The NSW Government has made many announcements on planning initiatives to support supply, but it’s more than just the supply side; delivery needs a stronger focus. Government initiatives to date are not yielding the results NSW needs nor the targets of the National Housing Accord that the Minns Government has committed to. This requires a much more determined project management style by the state government in partnership with the industry — and it needs to happen now.

The housing supply crisis across the state demands that the NSW Government review the impacts of its regulatory burden on the industry. Reducing current regulations and taxes and imposing a moratorium on additional changes would be a great place to start.

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