Why Qld construction code change will jack house prices up another $70k

The building industry says the adoption of a new construction code in Queensland will see up to $70,000 added on to the cost of new home builds. Here’s why.

Building industry leaders are fuming following the government’s announcement that Queensland’s adoption of the National Construction Code changes will only add 2 per cent onto the price of new home builds, saying their own calculations put prices up as far as $70,000.

The Courier-Mail on Monday revealed the price of building an average Queensland home would go up roughly $20,000, which Public Works Minister Mick de Brenni quickly refuted, claiming prices would only increase about 2 per cent.

Public Works Minister Mick de Brenni. Picture: Liam Kidston

But after speaking with various builders including Metricon, Brighton Homes and Plantation Homes, as well as Master Builders Australia and the Housing Industry Australia, The Courier-Mail can confirm house price will actually increase between $10,000 and $70,000.

Plans which show material changes to meet higher energy efficiency standards and spatial modifications to increase accessibility indicate costs to make homes more accessible will sit far higher than government estimates.

Builders say insulation alone would add thousands onto home designs, with further money spent on things like window glazing, window framing and fans to bring homes up to the seven star energy rating.

Industry stakeholders have argued accessibility and liveability measures should go ahead on October 1, but energy efficiency measures should be delayed until next year to give builders time to prepare, but also to allow energy efficient products to be manufactured in high volumes, allowing them to be purchased cheaply in bulk.

Here is a breakdown explanation of exactly how the two significant changes coming in on October 1 will affect both builders and future homeowner builders - including what exactly will cost more, and how long Queenslanders have to buy old home designs before prices skyrocket or they disappear altogether.

Examples of modifications made to Metricon’s single storey Freedom home include:

-Increase passage ways to accommodate wider doorways

-Raising floors for flush transition, levelling the home throughout

-Accessible bathrooms and toilets large enough for circulation space

-Hinged doors replaced by cavity sliding doors, including pockets and gliders

-Reducing window sizes, while also maintaining light efficiency and safety, for example, having four protection screens in second storey windows allowing them to be opened fully

-Using better performing glass

-Window frames with less aluminium

-Loose fill insulation

-Ventilation and air movement strategies like additional ceiling fans

The Sahara 43 is one of four designs to be scrapped by Plantation Homes. Picture: Facebook

Price breakdown:

Brighton Homes chief executive Brad Collins said high costs in Queensland were coming from insulation, tinted glazing and “fans in every room”.

“Some homes depending on block orientation will require further enhancements and, in some cases will not be able to be built, as the home will be unable to meet energy requirements,” he said.

“As a guide we would expect single storey to start around $20,000 and doubles up to $40,000 or more.

Mr Collins argued that energy efficiency measures alone would add a “minimum cost” of $20,000 onto a new home build

“The costs come from increased cost of glazing windows and increased use of insulation for walls and ceiling,” he said.

“(It) will far outweigh the claimed energy efficiency the home will produce. When you look at interest rates alone on extra borrowings to meet the requirements the customer is further behind.”

Metricon design director, Adrian Popple said the additional costs for Metricon were averaging $20,000 with their luxury homes expected to increase by $35-$40,000.

He said costings were due to the finer details, which all homes needed, but some more than others depending on size

“For us to redesign our homes to accommodate those larger areas takes a lot of time and cost to us,” Mr Popple said.

“It’s massive and they don’t talk about this but this is where the cost comes from.

“A 50mm difference between door sizes doesn’t sound like a lot but it means new doors will have to be manufactured, and they will add costs until they become the new standard.

“Giving the industry time to adapt and get their heads around it and procure these materials in a high volume will help reduce costs.”

Metricon has been busy redesigning their national portfolio for two years, splitting up which homes would remain available in each state and territory based on individual climate cost efficiency to keep them there.

“We build thousands of homes around Australia every year and are probably better positioned than most but the cost is the cost - it’s the same for any other builder,” Mr Popple said.

“And with locked in contracts we need to understand our costs upfront ahead of the game. which is different to a custom home builder.”

Example of additional costs for modifications in line with the NCC update.

Following years of industry hardship, which resulted in multiple company collapses including thee recent liquidation of the Porter Davis Homes Group and Lloyd Group, the industry will nervously await to see real financial impacts of the NCC October update.

Middle tier construction companies are expected to be hit hardest, due to the lack of resources available to make the swift transition to the new codes.

The construction industry in Queensland recorded 345 external administrations for the financial year to June 18, 2023, with industry leaders saying the new changes will inevitably apply more pressure to struggling businesses.

“There is a cost and it’s significant,” Metricon designer Adrian Popple said.

“We’ve tried not to be the whiny builder but they’re not helping us. For me it would be go with liveability first and the energy later and do it a bit at a time.”

While most builders have arrived at higher additional build costs, Plantation Homes general manager Alex Raleigh said her single storey homes had only gone up an average of $6,000.

“The effort from our team is commendable, given for example, our single storey base prices have only been impacted by an average of $6,000 compared to our last sale prices,” she said.

“We empathise with the consumer, given the impact of interest rate increases and personal budget stress.

“That is why we have invested in revamping our house designs with a focus on enhancing affordability.”

The Carmelle 28 is another home design scrapped by Plantation Homes. Picture: Plantation Homes

Cut off dates:

Each builder will issue their own cut off dates for home builder owners looking to purchase a design before the October 1 rollout.

Metricon has said it will be accepting lodgements until September 24, allowing them one week to process the lodgements.

“The cut off for use for existing customers to pay a deposit on the home is 24 September, which basically allows us a week to producer documents for lodgements,” Mr Popple said.

“If we can get a pre lodgement in the day before October 1, it’s good.

“But the land needs to register within six months of October 1, which is April 1.”

Brighton Homes chief executive Brad Collins said customers for the NXT Building Group had until September 30 to sign a new home build contract.

“If a customer signs a contract by September 30, they will not be exempt from the new government charges for energy efficiency,” he said.

Following individual cut-off dates, various home designs are expected to disappear from websites.

HIA chief executive Michael Roberts said the association had received feedback from major builders like Coral Homes revealing they had been forced to cut multiple designs from their portfolio that were no longer commercially viable.

Renewed calls for extensions:

Master Builders Australia chief executive Paul Bidwell said in light of the governments 2 per cent cost claim, he would be petitioning the government to subsidise any overflow costs that were sure to ensue.

“If the Minister is so adamant about this 2 per cent, if someone comes in with a quantifiable quote that is higher, the government should pick up the tab,” he said.

“There’s no such thing as a typical price. One example we just got from Toowoomba was an estimated $25,000 for waterproofing, and energy efficient additions totalling $22,000.

“The Minister talked about this 2 per cent so for a $500,000 it would be $10,000 tops … well for some it might but there’s a lot (of builders) telling us it’s a lot, lot more.”

Brighton Homes chief executive Brad Collins said the governments’ hard stance on introducing the new codes all at once would be another major setback for the industry following two years of crisis, supply chain issues and increased material and labour costs.

“This is likely to create a mini boom by people racing to avoid the government cost impost,” he said.

“We as a business support the policy, we do not support the timing and again request government delay the timing.

“A delay of 12 months would be of enormous benefit for suppliers and builders.”
MBA has delivered a list of concessions to Mr De Brenni, which they say need to be urgently clarified prior to October 1 to help ease pressure on the industry and bring down unnecessary costs for consumers.

The MBA requests:

• Allowing a tolerance of 3mm for the allowable shower ‘lip’
• Enable an ‘enclosed’ shower that is step-free and hobless
• Exempt the requirement for an accessible toilet on entry level where there are no living areas on the entry level (eg small houses/townhouses)
• Exempt small dwellings less than 55m2
• Exempt from liveable housing requirements dwellings that are already exempt from the step-free access into the home
• Clarify liveable housing requirements are only required for major renovations where more than 50 per cent of the volume of the house is being renovated, subject to certifier discretion as provided for in the Building Act
• Where liveable housing requirements do apply to renovations, clarify that bathroom renovations do not require level threshold or wider doorway unless removing door frames and changing levels of floors to enable compliance; that doorways, hallways, bathrooms and thresholds of the non-renovated portion to not need to be upgraded, and that the access path from street or carparking is not required
• Allow credit for solar panels to achieve 7 stars, or alternatively a set score in the whole of house rating to enable a credit for the 7 star requirement – to allow a better transition from 4.5 stars with credits to 6 stars with 1 credit
• More reasonable gradient for falls to non-mandatory floor wastes
• Exempt bathroom renovations from requiring a fall to an existing floor waste where no existing fall
• Exemption for narrow lots
• Additional solutions for the fall to non-mandatory floor waste requirement to enable more cost-effective solutions
• Rebates for housing types and zones where the Modern Homes requirements result in excessive increased costs.