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HIA Action Plan

More Houses for More Victorians: The Six Priorities

HIA Action Plan

More Houses for More Victorians: The Six Priorities

The Six Priorities

Planning

{{ truncate("Expediting new projects that provide more affordable, well built and designed housing options that meet the needs of all Victorians.") }}

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Land supply

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Property taxes

{{ truncate("Lowering property taxes to improve affordability of housing, connecting people with better social and employment outcomes.") }}

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Domestic building contracts

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Building Standards

{{ truncate("Helping industry prepare and consumers understand major impending changes to the design and construction of homes is vital.") }}

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Skills and training

{{ truncate("Ensuring the residential construction industry has the people and skills needed to meet Victoria’s housing needs, now and into the future.") }}

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Importance of Victoria's home building industry

It is a diverse and significant contributor to state economic activity and government revenue through the operation of various taxes, charges, and levies. As a sector it has close links to many other key Victorian industries ranging from mining and manufacturing to retail, rental, hiring and real estate services.

The residential construction industry also covers activities such as land development and site preparation, as well as building structure services such as architectural and engineering services. Its workforce covers numerous construction trades including framing and carpentry, plumbing, glazing, tiling, roofing, flooring and bricklaying, electrical wiring, painting, plastering, earthmoving, concreting, and landscaping.

While businesses in the industry include several ‘volume builders’ producing many thousands of homes each year it also includes smaller and bespoke builders who build homes that are more likely to be one offs.

Within this unique industry are businesses engaged in renovating and improving existing homes as well as those producing prefabricated or “kit homes”. Taken together, they all play an important role in providing the range and choice of housing Victorians want and need.

As the voice of the industry, HIA represents over 50,000 member businesses throughout Australia.

Good housing policy

Good housing policy removes barriers to new investment in housing, improves housing affordability and expands housing choice. These outcomes are key to raising economic prosperity, individual wellbeing and community liveability.

HIA considers the following principles should underpin good housing policy, providing a framework for thinking about where reforms should focus and how their impact should be measured:

Guiding principles
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  • Ensure Victorians have greater choice in the type of homes they live in, and where those homes are located (diversity).
  • Lower housing costs and improve housing affordability and mobility (affordability).
  • Spur local and international investment in the residential construction industry (investment).
  • Simplify and streamline the approvals process, which is currently a drag on the system and contributing to unnecessary cost (simplification).
  • Bring more land to market now and ensure Victoria’s future land supply needs can be met (supply).
  • Improve industry supply chains to reduce delays in the time it takes to build and renovate Victorian homes, without compromising building standards (productivity).
  • Foster new technologies, materials and processes to create better homes that are more efficient, durable, environmentally friendly and easier to maintain (innovation)
  • Improve access to social and affordable housing (accessibility).
  • Create enduring growth in the residential building industry’s workforce, including apprentices, and their skills (capacity).
  • Ensure a whole of government approach to housing policy that is wholistic (planning, regulation, insurance, building design and construction, resources, regional and industry policy, investment attraction, skills) (wholistic).

These principles underpin HIA’s Action Plan which identifies six priority areas where reforms are needed to improve housing construction, investment, ownership, and affordability.

HIA’s recommendations are designed to guide policy-makers on the steps they should take to address Victoria’s housing challenges, now and into the future. They have been informed by HIA members and our own research and thought leadership.

Importantly, they also mirror calls for change contained in numerous studies and reports on ways to improve planning and building reform, as well as initiatives taken in other Australian jurisdictions.1

1For example:

  • Victorian Building System Review: Stage One Final Report to Government, March 2023
  • Infrastructure Victoria: Our home choices - How more housing options can make better use of Victoria’s infrastructure, March 2023
  • Grattan Institute: How to make housing more affordable, 2021
  • Analysis of the impacts and outcomes of the ACT tax reform, University of Canberra, May 2020
  • Government of South Australia Housing Package, State Budget 2023-24, June 2023.

In Victoria in 2022

The Victorian residential construction industry employs over 290,000 people and was responsible for building over 57,000 new homes in 2022. Combined with renovations activity, this was worth $32.1 billion or 6 per cent of Victorian state final demand.

New homes built image card

Investment renovations

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HIA’s Action Plan

Planning
Land supply
Property taxes
Domestic building contracts
Building Standards
Skills and training
Policy area: Planning
Why reform is necessary What policy makers should do

ResCode Assessments

Victoria’s residential code assessment model giving councils discretion to approve compliant development, is not a level playing field.

Some compliant development is being blocked from entering the supply chain.

The VicSmart 10-business day decision pathway is also being underutilised.

  • Overhaul the ResCode provisions from a discretionary to a ‘deemed to satisfy’ pathway, where compliant development must be approved.
  • Amend the notification and third-party appeal rights process to raise the bar for ‘objections’.
  • Introduce a VicSmart permit pathway for dual occupancy development.

Significant Housing Projects

The Development Facilitation Program (DFP) is currently open to major projects on “shovel ready” land near an activity centre.

There are other infrastructure ready sites where this program could be operational.

Decisions are also sitting in the range of 1-2 years, where the program objective is less than 12 months.

  • Expand the DFP to include priority precincts, urban renewal and greenfield areas with major infrastructure provision in place.
  • Commit to completion of an advisory committee process and an assessment decision in 6-12 months.
  • Boost VPA staff resourcing to support the assessment and decision-making process.

Housing target commitments

Local government areas determine housing supply through their land use planning strategies, zoning and overlay decisions.

Tighter regulatory controls constrain housing supply, hampering the achievement of the state government’s plan to keep housing approvals at an average of more than 50,000 new homes a year.

  • Monitor and publish local government housing supply 6-monthly.
  • Benchmark actual ‘supply to targets’ published in the Victoria In Future 2023 projections. Link results to state government infrastructure/project funding in local areas.
Policy area: Land supply
Why reform is necessary What policy makers should do

Melbourne’s greenfield land supply pipeline will run out before 2041. That’s less than 18 years supply. A predictable and steady land supply is required to keep pace with demand.

Melbourne’s growth areas are currently contributing around 55 per cent of new housing growth because they offer housing choice, affordability a sense of place and therefore satisfy consumer needs.

  • Undertake a full stocktake of Victoria’s greenfield land supply (short, medium and long term).
  • Ensure a 15-year supply of greenfield land is available (with no less than 5 years of ‘build-ready’ land being ready for development).
  • Bring land to market faster, requiring Precinct Structure Plans to be completed in under 2 years.
  • Issue a directive to all government departments to identify surplus land to rezone for housing, including a share for public, community and affordable housing
Policy area: Property taxes
Why reform is necessary What policy makers should do

Melbourne home buyers pay about 40 per cent of the cost of a new house and land package in taxes, fees and charges - locking thousands of Victorians out of home ownership.

Development/infrastructure contributions can collectively amount to between $37,000 and $77,000 per dwelling in Victoria.

Victorians pay the highest rate of stamp duty in Australia.

  • Establishing a time frame for the abolition of stamp duty on residential property conveyancing.
  • Until this occurs, index stamp duty thresholds annually.
  • Reintroduce off-the-plan stamp duty savings, including for foreign buyers.
  • Return the First Home Owner Grant to $20,000 for eligible participants building a new home in metropolitan Melbourne.
  • Reform Homebuyer fund eligibility requirements so that all participants only require a 3.5 per cent deposit and are eligible for a 35 per cent shared equity contribution.
  • Amend planning legislation to cap the percentage of government infrastructure taxes that can be sought under any infrastructure contributions scheme.
Policy area: Domestic building contracts
Why reform is necessary What policy makers should do

The Domestic Building Contracts Act 1985 is out of date and imposes several unnecessary or poorly targeted restrictions on both owners and residential builders.

The requirements around cost escalations, progress payments and timing of signing contracts are not fit for the purposes of builders or consumers.

In addition, should a building dispute arise between a consumer and a builder, both parties are poorly served by the existing measures to resolve matters through the mandatory domestic building dispute resolution process run by Domestic Building Dispute Resolution Victoria (DBDRV).

Immediate actions
  • Have a notice approved to allow for cost escalation clauses in domestic building contracts where the contract price exceeds $500,000.
  • Increase the threshold for a domestic building contract to be a major domestic building contract to at least $16,000 or whatever amount is required for domestic building insurance to be obtained for a domestic building contract.
  • Increase the threshold for domestic building insurance to be taken out to $20,000.
  • Decrease the threshold for the use of cost plus contracts back to $500,000, from their current level of $1 million.
Introduce a new Act to regulate home building contracts
  • Have focused contract rules for the different types of home building projects, including small building projects, renovations, new detached homes, townhouse and apartments.
  • Have separate contract rules for consumers and business clients.
  • Allow for flexible pricing, with protection for consumers, to respond to delays in signing of contracts and commencement of projects.
  • Include up to date rules for progress payments without prescribed progress stages but with payments linked to work in progress.
  • Abolish DBDRV and have disputes heard in court, or VCAT.
Policy area: Building Standards
Why reform is necessary What policy makers should do

The National Construction Code 2022 imposes significant changes to make housing more accessible, manage and prevent condensation and achieve higher levels of energy efficiency.

Businesses need time to understand the new requirements, make the necessary changes to their business practices, update home designs, build display homes and inform customers.

The Building System Review seems to have stalled. Its initial findings, and a report by Cladding Safety Victoria, have highlighted a number of concerns about the quality of class 2 buildings including waterproofing and fire separation as well as cladding.

  • Ensure there is no departure from the Victorian Government’s revised adoption date of 1 May 2024.
  • Ensure industry is supported to understand and prepare for the new requirements.
  • Ensure consumers are given information and advice about what the changes mean in practical terms for housing design and liveability, recognising the changes will also add to the cost of building homes in Victoria.
  • Continue the Building System Review and concentrate on identified issues with class 2 buildings to ensure that the quality of these buildings meets consumer expectations.
Policy area: Skills and training
Why reform is necessary What policy makers should do

The nature of home building is changing due to technologies, processes, and innovations in building materials, as well as complex regulatory requirements.

Many older builders are retiring. Others are exiting the industry due to uncertainty and challenging economic conditions.

Shortages of skilled workers continue to place a brake on building industry capacity.

There is an urgent need to invest in workforce capacity and capability, including growing apprenticeships, to ensure home builders have the workforce they need to meet Victoria’s future housing needs.

Work with industry to ensure the Victorian Government’s 2023 Skills Plan prioritises VET reforms that will:
  • Keep talent and experience in the industry.
  • Only introduce registration requirements for trades whose work is high risk.
  • Avoid unnecessary licensing rules for workers who are not running their own business.
  • Improve pathways for young people into industry and increase workforce diversity.
  • Support higher apprentice intake, retention and completion rates.
  • Upskill and reskill existing workers to ensure their technical knowledge and competencies keep pace with changing technologies and ways of working.
  • Support worker career pathways, helping those who choose to progress to operating their own business, or become home builders.

Become a HIA member today

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