Category: Building & Construction

More Apartment Problems

The Sydney Morning Herald reported that an Erskineville apartment development remains a ghost town more than 12 months after it was completed, with the City of Sydney refusing to allow owners to move in over fears the developer did not properly clean up toxic land underneath it.

The Herald’s revelation that owners have been prevented from living in a fourth Sydney apartment building over safety concerns comes less than 24 hours after an emergency meeting between the state and federal governments over the country’s building standards crisis.

The Zetland, Mascot and Opal Tower apartments across Sydney have all been evacuated in the last 12 months due to major defects.

There are no known defects in the Erskineville development.

Building ministers announce national approach to reforms

A new agreement by the Building Ministers Forum to implement a national approach to reforms is a major step forward in addressing poor building outcomes and restoring community confidence. Via FPA Australia.

At a Building Ministers Forum (BMF) meeting this morning, state, territory and Commonwealth ministers announced a unanimous decision to establish a national approach to implementation of recommendations made by the landmark Shergold-Weir report, Building Confidence.

The new national approach will see an expanded role for the Australian Building Codes Board (ABCB), and establishment of a dedicated implementation team under the aegis of the ABCB. The implementation team will include both government and industry representatives, and will drive implementation of the Shergold-Weir report’s recommendations, including potential changes to the National Construction Code (NCC).

As part of the change, the ABCB’s strategic plan will be recast, and the organisation’s capabilities further strengthened to meet its expanded role and responsibilities.

“The announcement today is a significant step forward for both the building sector, including fire protection, and the community, and paves the way to deliver an important program of reforms,” said Scott Williams, CEO of Fire Protection Association Australia (FPA Australia), who attended the BMF meeting in Sydney.

“Building compliance is a national problem, and we congratulate the BMF on coming together to agree to a national response. The ABCB is absolutely the correct vehicle to drive that response, and its coordination will provide the leadership and stability needed to implement the major reforms required.

“The community’s trust in the building sector has been eroded, and there is a lot of work to be done to restore that by both industry and government. There is no more important time for us to be united and work together to rebuild that trust.”

Victorian Cladding Canary Sings To The Tune Of $600m

The Victorian Government has announced $600m to help cover the costs of rectifying around 400 properties in the state, from about one third of those audited of high-risk dwellings (not so far covering any commercial buildings). Half may be recovered from higher building levies.

This issue will run and run, as it is a country-wide issue, thanks to the deregulation of standards a decade or so ago. The bill will run into billions and take years to fix up. The supervisory approach also needs attention.

It also begs the question of what happens to those residents who have already spent to fix buildings?

The Andrews Labor Government will establish a world-first program to tackle high-risk cladding and keep Victorians safe.

Premier Daniel Andrews joined Minister for Planning Richard Wynne to announce a $600 million package to fix buildings with combustible cladding.

The grants will fund rectification works on hundreds of buildings, found to have high-risk cladding, to make sure they’re safe and compliant with all building regulations.

The program will be overseen by a new agency, Cladding Safety Victoria, which will manage funding and work with owners corporations from start to finish.

The Labor Government will directly fund half of the rectification works and will introduce changes to the building permit levy to raise the other $300 million over the next five years.

Rectification of buildings with high-risk cladding and the establishment of a dedicated cladding agency were key recommendations from the final report from the Victorian Cladding Taskforce released today.

The Taskforce was established by the Labor Government in 2017 to identify how many buildings had combustible cladding and potential solutions to fix them.

The Taskforce has also recommended the Victorian Government seek a contribution from the Commonwealth to help fund rectification, as combustible cladding is a national problem.

The Taskforce, headed by former Victorian Premier Ted Baillieu and former Deputy Premier John Thwaites, has worked with the Victorian Building Authority to identify 15 buildings that will have their cladding fixed first.

Work on these high-risk buildings was funded in the Victorian Budget 2019/20 and will begin in the coming weeks. Cladding Safety Victoria will also be contacting owners corporations and property owners shortly, starting with those whose buildings are at the greatest risk.

The government will also review the state’s Building Act to identify what legislative change is needed to strengthen the system and better protect consumers.

For more information, including a copy of the Victorian Cladding Taskforce’s final report, visit https://www.planning.vic.gov.au/building-policy/victorian-cladding-taskforce

Survey shows property confidence increase after year of decline

The Property Council of Australia believes a number of economic challenges remain for Australia’s property industry, despite new data showing increased confidence in the sector for the first time in 12 months, via The Recon Daily.

The latest ANZ/Property Council Survey for the September 2019 quarter shows that industry confidence has picked up by 13 index points, improving in all states and territories, except for the ACT.

Property Council of Australia Chief Executive Ken Morrison said while there had been a series of positive developments within the market since the election, residential construction activity was set to continue its decline, impacting jobs and the economy.

“Following the federal election, we have had a quadrella of positive policy news which translated into a strong sentiment bounce,” he said.

“These are very welcome steps and have led to much stronger expectations of national economic growth and the availability of credit.

“However, the property sector is not immune from the challenges facing the rest of the economy and a number of state governments have just embarked on a range of investment-sapping tax increases. 

“State budgets in Queensland, Victoria and South Australia have hit the property industry with arbitrary and poorly designed tax increases which will hurt investment and job creation, and risk undermining the current sentiment turnaround.”

The results of the survey follow the release of CoreLogic’s June Home Value Index earlier in the week, which indicated growth in Sydney and Melbourne for the first time since 2017.

ANZ Head of Australian Economics, David Plank, said there had been emerging signs of stability in the residential property market across the past three months.,

“In particular, we noted the pace of house prices declines was slowing and that the auction clearance rate was beginning to rise,” he said.

“Over the past month lower interest rates, the proposed change to the interest rate floor by the regulator, and the removal of uncertainty around the impact of the possible tax policy changes have boosted sentiment toward housing.

“The results of the latest ANZ/Property Council Survey capture this shift, with most parts of the survey showing material improvement.”

Home Approvals Remain Weak In May 2019

The ABS released their May 2019 Building Approvals data today. The trend estimate for total dwellings approved fell 0.5% in May, while the less reliable seasonally adjusted estimate for total dwellings approved rose 0.7% in May.

As you know DFA uses the trend series in our analysis and modelling.

However, most reports will pick the seasonally adjusted series and claim a “rebound” in approvals.

In fact, on both trend and seasonally adjusted measures, private sector house approvals fell, by 1.3% in trend terms and 0.3% in seasonally adjusted terms.

On the other hand, private sector dwellings excluding houses rose 0.6% in trend terms. while the seasonally adjusted estimate rose 1.2%.

Across the states, total approvals rose a little in Queensland and South Australia, together with a big hike in Canberra (on small volumes), while there was a percentage fall in New South Wales and Victoria, as well as Western Australia and the Northern Territories.

The volume trends really highlight the declines in New South Wales and Victoria, which are not offsetting the small rises elsewhere, especially in the ACT.

In New South Wales the trend estimate for total number of dwelling units approved fell 0.7% in May, while the number of private sector houses fell 2.9%.

In Victoria the trend estimate for total number of dwelling units approved fell 1.5% in May, while the number of private sector houses fell 1.3%.

In Queensland, the trend estimate for total number of dwelling units approved rose 0.4% in May, while the number of private sector houses fell 0.1% in May.

And in South Australia, the trend estimate for total number of dwelling units approved rose 0.4% in May, while the number of private sector houses was flat in May.

Finally, In Western Australia, the trend estimate for total number of dwelling units approved fell 0.7% in May and the number of private sector houses fell 0.7% in May.

The trend estimate of the value of total building approved fell 0.2% in May and has fallen for three months. The value of residential building fell 0.6% and has fallen for 16 months. The value of non-residential building rose 0.3% and has risen for nine months.

The seasonally adjusted estimate of the value of total building approved fell 0.2% in May. The value of residential building rose 4.7%, while the value of non-residential building fell 6.7%.

The HIA said “The decline in dwelling approvals appears to be losing momentum. This is a welcome reprieve for the housing industry after the persistent declines measured throughout 2018”.

“Recent positive news relating to house prices and new home sales has started filtering through. Even if this isn’t the bottom of the cycle the pick-up in new home sales in May suggests the pace of decline is slowing”.

Westpac said ” Overall the May update was a touch firmer than expected but the detail was not great with clear questions around the sustainability of the gain in high rise approvals and weakness elsewhere”.

That is closer to the mark. Little here, yet to argue for a shift in gears.

As Westpac put it ” All of this still predates several positive developments for housing, in particular: the Federal election result, which has removed the threat of tax policy changes around negative gearing and capital gains tax; and the RBA’s interest rate cuts in June and July. More timely market measures suggest wider housing market conditions have improved, especially in Sydney and Melbourne. We suspect that shift will be slow to flow through to new dwelling construction with an overhang of stock in some segments and financing issues likely to continue restraining activity near term.

Certainly the major markets of Sydney, Melbourne and Brisbane all have a way to go before we can claim a rebound, and of course there is a significant oversupply of new high-rise under construction in these centres, despite the worries about construction standards, and the disappearing indemnity insurance in the sector.

As the ABC reported:

To be a registered surveyor with the Victorian Building Authority (VBA) a person must have professional indemnity insurance, without any exemptions.

The same rule applies in NSW and Queensland.

But insurance companies are no longer providing this option and the industry is warning work on buildings may simply stop.

Other surveyors have reported that the cost of their insurance premiums and excesses have more than quadrupled.

Building surveyors are responsible for signing off on buildings, including building permits and occupancy permits.

While local government building surveyors can also sign off on permits, private building surveyors have been the preferred option for most of the building industry.

The chief executive of the Australian Institute of Building Surveyors, Brett Mace, warned the building industry could start to slow down over the next year.

“We think it’s a huge crisis,” Mr Mace said.

“If building surveyors are unable to be registered then you’re not going to be able to provide approvals and the construction industry will come to a stop.”

The Master Builders Association (MBA) said up to 30 per cent of building surveyors are required to renew their insurance by the end of June.

“If they are unable to obtain insurance or the insurance offered to them is non-compliant due to exclusions being imposed, many building projects could come to a standstill,” the MBA said in a statement.

One more reason to be cautious about a lift in approvals ahead.