Constructing through change: challenges facing Australian developers in today’s policy landscape
Australia's development landscape is in constant flux, shaped by ambitious policy commitments from the government and a looming federal election. While many existing initiatives aim to address critical issues like housing affordability and sustainability, they also present emerging challenges and opportunities that developers must navigate strategically.
Here are some key issues for developers to consider in light of current Australian government policy commitments:
THE NATIONAL HOUSING ACCORD AND AMBITIOUS HOUSING TARGETS
The government has set a national target to build 1.2 million new well-located homes over five years, starting from mid-2024 under the Accord. This includes direct funding and incentives for states and territories to meet their share of the target.
Considerations for developers:
Increased demand and competition: The push to meet these targets will likely intensify demand for land, materials, and skilled labour, potentially driving up costs and increasing competition among developers.
Zoning and planning reforms: Achieving these targets hinges on states and territories undertaking significant zoning, planning, and land release reforms. Developers need to stay informed about these evolving regulations and potential fast-tracked approval pathways in priority areas.
Affordable housing requirements: A significant portion of the Accord focuses on delivering affordable housing. Developers may face requirements or incentives to incorporate affordable housing components into their projects, impacting project feasibility and design.
Infrastructure bottlenecks: Increased development activity will strain existing infrastructure (transport, utilities, etc.). Developers need to consider infrastructure availability and potential government programs like the Housing Support Program, which provides funding for essential services and amenities.
SUSTAINABILITY AND ENERGY EFFICIENCY MANDATES
The government is strongly emphasising sustainability and energy efficiency in the built environment through measures like updates to the National Construction Code (NCC) to include higher energy efficiency standards and provisions for buildings.
Considerations for developers:
Increased construction costs: Implementing higher energy efficiency standards and integrating sustainable technologies (solar panels, rainwater harvesting, etc.) can initially increase construction costs, and need to be factored in to project budgets.
Material selection and innovation: Developers will need to explore and adopt new, sustainable building materials and construction techniques to meet these standards. This could drive innovation in the sector.
NABERS ratings and disclosure: With an increasing focus on building performance disclosure through systems like NABERS, developers need to design and construct buildings that achieve favourable ratings to attract buyers and tenants.
Green financing and incentives: The government is offering some incentives and concessional loans for energy-efficient and sustainable housing projects. Developers should explore these opportunities to offset initial costs.
FOCUS ON REGIONAL DEVELOPMENT AND INFRASTRUCTURE
There's a growing emphasis on developing regional areas to alleviate pressure on major cities, often linked with infrastructure investments.
Considerations for developers:
New growth areas: Developers should monitor government infrastructure plans (e.g., transport links, utilities upgrades) to identify potential growth areas and investment opportunities in regional centres.
Infrastructure provision: Developing in regional areas might require developers to contribute to the provision of essential infrastructure.
Understanding regional demand: Market research is crucial to understand the specific housing needs and preferences in different regional locations.
BUILD TO RENT (BTR) INITIATIVES
The government is actively encouraging the growth of the BTR sector through various incentives and policy adjustments, recognising its potential to increase housing supply and affordability.
Considerations for developers:
New business models: BTR requires a different development and management approach compared to traditional build-to-sell projects, focusing on long-term rental income streams and tenant management.
Investment and financing: Developers need to understand the specific financing models and investment opportunities associated with BTR projects, which often involve institutional investors.
Design and amenities: BTR developments typically emphasise communal spaces, amenities, and professional management to attract and retain tenants, influencing design considerations.
SKILLED LABOUR SHORTAGES AND TRAINING
The government has acknowledged the critical shortage of skilled construction workers and has announced measures like Fee-Free TAFE and streamlined migrant skills assessments to address this. Whatever it is, the way you tell your story online can make all the difference.
Considerations for developers:
Project delays and increased labour costs: The ongoing labour shortage can lead to project delays and higher labour costs, impacting project timelines and profitability.
Importance of training and apprenticeships: Developers may need to play a more active role in training and apprenticeship programs to help build the future workforce.
Adoption of innovative construction technologies: To mitigate labour shortages, developers might need to explore and adopt more efficient and less labour-intensive construction technologies and methods such as modular construction.
NAVIGATING THE FUTURE
For Australian developers, staying informed about evolving policy commitments and their implications is crucial. There is a need for active engagement with government at all levels to understand policy directions and provide feedback. As the landscape continues to change, investment in R&D to explore new technologies and efficient construction methods, as well as market research to identify emerging growth areas and understand evolving buyer/tenant preferences will be critical to success.