New home sales surge ahead of regulation deadline
New rules to ensure that homes meet high standards of energy efficiency are having a noticeable impact on where and when Australians are choosing to build homes.
The sale of new homes jumped by 22.1 per cent in April, according to data from the Housing Industry Association (HIA) as home buyers rushed to get ahead of the implementation of new regulations in certain states that could add around $25,000 to the cost of a new home build.
As HIA chief economist Tim Reardon explained: “Changes to the National Construction Code (NCC) came into effect in Victoria and Queensland on the first of May. This is expected to add thousands of dollars to the cost of construction through, among other things, the code’s new energy efficiency standards.”
Contracts that were executed prior to the deadline will not have to meet the new rules, and HIA attributes this change to the jump in new home signings over the course of April.
According to Reardon, the trend is being seen across the country as the code rolls out.
“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.
“As with New South Wales, a ‘shadow’ of demand for new homes is expected in Victoria and Queensland in May and June, reflecting the sales that were drawn forward into April,” he explained.
In HIA’s view, the NCC changes are putting pressure on the residential construction sector at a moment when it can least afford it.
“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 home ownership and the rental market,” Reardon said.
“The NCC changes are also inequitable as they impose a much higher cost of national carbon abatement goals onto those building a home than any other segment of the economy. These measures are inconsistent with a least cost, economy wide approach to carbon abatement,” he commented.
Reardon noted that the next phase of building regulations is now open for public consultation. He implored the government to consider the added cost to construction when moving forward with any further changes.
“Lowering the cost of delivering new homes to market is essential to achieving the Australian government’s target of 1.2 million new homes over the next five years, and improving housing affordability across the country,” he said.