Industry Update from HIA

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Housing Update – March Quarter was a Record

Over the past few years, Victoria has seen record amounts of housing activity.

In terms of dwelling commencements, the March 2018 quarter in Victoria was a national record – not just a state record. With 10,185 detached house starts and 11,965 multi-unit dwelling starts (22,150 in total) the March 2018 quarter was the strongest individual state performer of any state on record. Nevertheless, the declining home prices in recent months signals a graduation into the downside of the housing cycle and it is unlikely that this phenomenal result will be repeated for quite some time.

In terms of detached houses – in the 2017/18 financial year there were around 38,956 commencements. This is the highest number of starts in Victoria in any financial year on record. From this very high base, starts are forecast to decline by 7.9 per cent in 2018/19 and then decrease by a further 9.8 per cent in 2019/20. Combined factors such as declining house prices and lower numbers of foreign investors influence these figures.

The 2017/18 financial year also concluded with around 36,018 multi-unit dwelling starts which is also an all-time record for the state. From this exceptionally high base, we expect starts will decline by 22.9 per cent in 2018/19 and then decrease by a further 24.5 per cent in 2019/20.

We are expecting a moderate downturn in new home building activity over the years ahead, although it is prudent to remain alert to factors which could trigger a more pronounced downturn (i.e. an economic shock). While there are no imminent threats to the outlook, two areas we are watching closely are policy developments that could restrict population growth and any changes that would create additional tax imposts on housing such as changes to negative gearing or capital gains tax.

The state’s renovation market has faced some challenges over the last 12 months with expenditure down by 8.6 per cent over the year. Following the slide during 2017/18, the sector should regain most of the lost ground with a 7.2 per cent lift in activity expected during 2018/19. This should then stabilise in 2019/20 with and we expect a further expansion of 3.7 per cent in 2020/21. This would lift the value of Victoria’s home renovations market to $9.18 billion.

Registration of Trades

The Victorian Government has recently passed a Bill which will require the registration and licensing of subcontractors and employees who carry out building work in Victoria. Now that it has been passed, it will be the first step in expanding the current registration requirements. It is not expected to start operating until 2020.

However, at this stage it is unclear as to the types of trades that will require registration or licensing or the qualification and experience requirements associated with becoming a registered or licensed trade. But the builders will need to ensure that all trades working on site – even if the trade is a contractor or employee of a subcontractor engaged by builder is registered or licenced.

The Government did indicate in the Parliamentary debate that the trades likely to be considered first for registration and licensing are “carpentry and framing, plastering work, waterproofing, bricklaying and footing and foundation work”.

While further details will be in the regulations, which will be released for public comments next year, HIA understands that:

  • Any requirement for a trade to be registered or licensed will not apply until at least 2020.
  • The introduction of the proposed registration and licensing scheme may be staggered over a number of years.
  • There will be a system for provisional registration or provisional licences for at least five years to allow for existing subcontractors and employees to obtain the prescribed qualification and/or experience.
  • Another consequence is that it looks like registered trades will be required to hold domestic building insurance eligibility regardless of whether they work directly for a homeowner or not.

If you currently work as a sub-contractor or employee in a trade such as waterproofing, plastering, carpentry or bricklaying, you may wish to start investigating the current qualification and experience requirements for being registered as a domestic builder limited. It may be worth applying sooner rather than later to be registered as a domestic builder limited for your trade to avoid a later rush.

If you require further assistance HIA members can contact HIA workplace services on 1300 650 620.

Fiona Nield
Executive Director – Victoria
Housing Industry Association