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Victorian home buyers rush to avoid building code changes

Media release

Victorian home buyers rush to avoid building code changes

Media release
“New home sales in Victoria jumped by 34.9 per cent in April, as home buyers rushed to get ahead of the new building code changes expected to add around $25,000 to the cost of building a new home,” stated HIA Victoria Executive Director, Keith Ryan.

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.

For more information please contact:

Keith Ryan

Executive Director - Victoria

Thomas Devitt

HIA Senior Economist
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