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The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.
“Changes to the National Construction Code (NCC) came into effect in Victoria on the first of May. This is now proving to add thousands of dollars to the cost of construction through the Code’s new liveable housing, energy efficiency and condensation mitigation standards,” added Mr Ryan.
“To get ahead of these cost increases, home buyers rushed to sign the contract for the construction of their new home by the end of April.
“New South Wales experienced the same phenomenon last September when the state introduced its latest energy efficiency standards, adding significantly to the cost of a new home. This was followed by an equally large drop in sales in the subsequent months.
“Policy makers can take no joy in the April new home sales numbers as they will be short-lived. As with New South Wales, a ‘shadow’ of demand for new homes is expected in Victoria in May and June, reflecting the sales that were drawn forward into April.
“Additional regulatory costs, such as the NCC changes, are one of the causes of the acute shortage of housing. The changes are intended to achieve energy efficiency and accessibility outcomes, but they also force people out of homeownership and the rental market.
“The cruel reality about the building code changes is that many people are not in a position to commit to building a new home until interest rates start to fall. These potential home buyers now have even less purchasing power and probably will need to wait longer to achieve their goal of owning of their own home.
“Ongoing changes to building codes will continue inflating the costs of construction with the next phase of building codes now open for public consultation. There is a real risk that government indifference to the increased costs resulting from new building codes will be disregarded when deciding when the proposed changes should commence.
“If ever there were a good time to stop inflating the cost of home building, that time is now.
“Governments need to slow down if not pause the pace of change in building codes that have dominated the home building environment in recent years. Consumers also need a break, as each change adds to the cost of housing.
“Lowering the cost and red tape associated with building and delivering new homes to market is essential to achieving the Victorian Government’s target of 800,000 new homes over the next decade, and improving housing affordability across the state,” concluded Mr Ryan.
“Adelaide, Brisbane and Perth are seeing residential land values grow at a rapid rate, while Sydney and Melbourne’s values remain relatively stable,” stated HIA Senior Economist Matt King.
Plumbing and drainage inspections in the Huntlee and North Rothbury areas are moving from Cessnock City Council to Building Commission NSW.
The BASIX Transition period for eligible signed building contracts will end on 30 September 2024. BASIX Certificates must be generated by this date to apply the pre-1 October 2023 BASIX standards.
“As the number of new homes under construction continues to decline builders are reporting fewer difficulties scheduling skilled trades workers on their jobs, although availability of skilled workers remains worse than prior to the pandemic,” stated Geordan Murray, HIA Executive Director – Future Workforce.