Victorian home buyers have been given a $40,000 reprieve after the state government delayed changes to the National Construction Code.
On August 26 2022, Victoria agreed to increase minimum energy efficiency building standards for new homes from 6 to 7 stars under changes to the National Construction Code 2022.
The new changes were to come into effect October 1, 2023, but have now been delayed to May 1, 2024 according to the Herald Sun.
It comes as Metricon, Australia’s largest residential builder, has revealed it believes the struggling housing construction sector will return to boom times as soon as next year.
In April, Wood Central reported on the clash between builders and energy groups over the changes to the National Construction Code.
At the time, the Housing Industry Association (HIA) pushed for a deferral of significant changes to energy efficiency, mobility entry and reinforced bathrooms due to the surge of construction companies going into liquidation.
According to data from the Frame and Truss Association of Australia (FTMA), insolvencies were at their highest levels since 2019, with frame and truss manufacturers on high alert.
Urban Development Institute of Australia Victorian president Tom Trevaskis said the move was “a weight off for the industry”, with the UDIA now seeking to extend the delay in line with Western and South Australia, who will not enforce the new code until October 1, next year.
Mr Trevaskis said the industry had estimated that meeting the new requirements would add $30,000-$40,000 to the price of building a new home.
“So we will continue to look for more, whether it’s a further deferral or perhaps exemptions for certain homes — perhaps for smaller lots or those on a slope,” he said.
Mr Trevaskis added that the delay comes as international shipping issues and local materials shortages abate, with buyers starting a new home build today likely to have the keys in a typical seven to 10-month period — half the timeline of many builds over the past 18 months.
Housing Industry Association Victorian executive director Keith Ryan said the worst of a trade shortage was showing signs of easing, making preparing for the NCC changes easier.
However, Greens MP Ellen Sandell said the delay was “ridiculous” and would lock homeowners into high energy bills.
“With Labor’s delay, we’re going to see a proliferation of poor-quality, energy-inefficient homes built over the following months, which is bad for people’s health, wallets and the climate,” Ms Sandell said.
Building material shortages have all but dissipated
Building material shortages, like those for timber frames, have caused chaos for the construction sector over the past year but are resolved today, according to Housing Industry Association’s Victorian executive director.
“But I think it’s important to stress that it’s not just governments who are saying this has to happen,” Mr Ryan said.
“Consumer demand is also a factor; you already have homes well and truly above the requirements because people want them.”
He added that the delay would give Victorians on blocks that might not suit a seven-star build in line with their floorplan needs a chance to avoid seeking a costly alternative.
Metricon forecasts ‘housing boom’
Metricon Victorian and New South Wales executive director Peter Langfelder said the delay to the building code change provided buyers with a “great window” to get in before housing costs increase.
In May 2022, Metricon was forced to defend itself from insolvency rumours following the unexpected death of its CEO and founder Mario Biasin but has recovered strongly following an August 2022 restructure.
“And by May next year, a good 50 per cent of our display homes will be NCC compliant, but the others we will still have to explain changes for,” Mr Langfelder said.
“If we had gone ahead at October 1, it would have been much less than 50 per cent.”
Metricon is also tipping Victoria’s new home market back to boom times as soon as next year, with migration surging and a housing shortage already biting.
“We see the worst is behind us and see a lot of blue sky moving forward,” he said.
“But while it was a once-in-a-lifetime circumstance for the building industry, it could happen again, and before it happens again, I think the industry, industry bodies, and government should get together to discuss what happened, how it happened and how to make sure it doesn’t happen again.”
Building Groups now push for changes to the Payments Act
Topics in that discussion could centre on fixed contracts and cover more regular progress payments, rise and fall clauses or forcing builders to wait for the land to title before issuing a contract.
“That could all improve the risks for the builder and keep a customer-friendly contract,” Mr Langfelder said.
Both Mr Trevaskis and Mr Ryan agreed Victoria’s building industry had weathered the worst of the construction sector crisis, though it was not entirely out of the danger zone yet.
They also seek further dialogue with the government to address issues like fixed contracts.
A state government spokesperson said they would continue to work with the building industry.
“We will continue to work closely with the building industry and Victoria’s building regulator to support a smooth transition to full adoption of these new standards on May 1, 2024,” the spokesperson said.