Navigating Home-Building Challenges: Strategies Ahead

Challenges and Opportunities for Home-Building

This year has been all too challenging for the home-building industry. And regrettably, it looks like next year is not going to get any easier. But there are some positive signs to give us hope.

The year began with us preparing for the implementation of the National Construction Code 2022 in May 2022 and then in October 2022. The May implementation went ahead but after some reflection, and strong advice from HIA and others, the Victorian government decided to defer the October 2022 implementation until May 2023.

In March we saw the collapse of Porter Davis Homes. There were a number of home-building business failures before and after this event but it is fair to say that the Porter Davis failure got the most attention. There will continue to be a number of home-building businesses closing their doors but this will ease as businesses adjust to the new economic conditions we face. With a growing population, the need for new homes will gradually grow.

“Collapse of Porter Davis Homes in March highlighted industry challenges.”

Both the Australian and Victorian governments have also announced ambitious targets for the number of new homes to be built in coming years. While these targets will seem unachievable, the fact that governments are recognising that increasing the housing supply is critical is a major improvement. And the need to support home builders to achieve these targets has the potential to improve government regulatory policies.

“Governments are recognising that increasing the housing supply is critical is a major improvement.”

One important point to stress however is that the new homes to be built will need to reflect the needs of consumers and the capacity of the industry to supply new homes. Large multi-unit developments will be important in supplying new homes. But building a larger number of smaller multi-unit developments and building an increased number of detached homes will be even more critical to achieving the government targets.

By the time this article is published, it is likely that more information about easing planning restrictions for small second homes (granny flats) will be available and maybe even in place. These welcome reforms will allow for these smaller homes to be built on blocks with existing homes and increase the affordable housing supply. There will be good opportunities for home builders to build these small second homes, but they will need to be careful to make sure that they still obtain building permits and comply with relevant building regulations including siting requirements.

Finally, it is necessary to remind home builders and trades working directly for homeowners that when they sign any contract to carry out home building work for more than $16,000, they must first obtain a domestic building insurance policy before they collect any money from the client. Recent insolvencies have indicated that some builders and trades are still collecting deposits without first getting domestic building insurance for their clients.

”Builders must obtain domestic building insurance before collecting money for projects over $16,000.”

HIA members may contact our Technical and Workplace Services team to get further advice about the above issues. Our website and regular emails will also have further information for our members.