Government Housing Targets - So Who Is Going to Build Them?

Victoria needs millions of new homes. Here’s where they will be built

It's a bit of a joke.

Along with other developers we are all hesitant to build given the interest rate environment, rising construction costs and lack of labour, grouping of land taxes affecting cash flow, combined with new energy efficiency ratings, plus an increase of 40-60% in insurance costs.
Most guys I know are just finishing up and that's it. We have lots of sites with plans approved, but will most likely sell them. Most of these sites would not be suitable by themselves as a PPR.

Remember only small scale developers do townhouse lots of 4-8 or less. Any bigger you go mid tier and apartment blocks etc all go with larger developers who are falling like flies as they cannot find the trades to tender for these jobs as they are often much less lucrative than smaller builds.

So I'm very interested to find out what exactly the government thinks is going to happen after hammering down on developers with red tape for decades and lately smashing out the land taxes especially on vacant land whilst we have been waiting for planning to go through?

Comments

  • +18

    Seems market is ripe for flat-pack or modular prefab houses.

    • +15

      Cost more than the equivalent home, just faster. No one apart from a small portion of the population has interest in it.

      They are terrible to live in and look terrible too.

      Even multi units build out of fast concrete panels are an absolute eye sore in the north and have created vast swaths of devalued apartment properties.

      • +4

        and look terrible too.

        too bad looks are a luxury

        • +8

          They are terrible to live in and look terrible too.

          Show us a house built in the last 30 years that "looks good".

          • +6

            @smartazz104: I see new places and think "you'll look naff af in 10 years".

            I see places built 10 years ago and think "what were they thinking". Many are already showing serious signs of age and weather due to the nasty way houses are built today. But all is good because someone made some money.

          • +2

            @smartazz104: Most 2000-2005 brick houses look good before everyone discovered rendering.

            • +1

              @Phoenixzeus: I wonder how many people realise the rendering is covering cheap and efficient styrofoam.

          • @smartazz104: I'm glad I'm not the only one who find modern "minimalist" tract housing repellent. I don't understand why people want to live in a suburb full of identical 'greysacle' achromatic homes. Levittown in the 50s in America was the first mass production housing project. Houses then were build for ex-soldiers.

      • +21

        You go overseas and everything here looks terrible anyway.

        Money doesn't buy good taste…

        People in Australia only care about the land, spend millions on the land and then build something atrocious with the money they have left. No temperature or noise insulation, no design, no practicity, no reliability/durability. Then they build another ugly granny house at the back to charge 1000 weekly on Airbnb.

        It's so rare to see a beautiful house here, people clearly don't care about it. They care about re sale price, which is pretty much only the land, and that's it.

        At this stage, whatever increase the number of properties is probably positive, even if they continue to be ugly and poor quality.

        • +12

          It isn't that people don't care, but do you understand how much it costs to build a beautiful house in Australia?

          • @serpserpserp: Yes, I know… It's also about choices. In other countries where the property culture is not strong, people build one beautiful house to live in. Here people buy 3+ lands and build shitty houses, one to live in and others to rent. Even if they can magically build the number of houses that they are advertising, which they won't, that doesn't address the cause of the problem.

            • @this is us: That is some people I think. I'm still just working on getting one property and having a liveable house on it!

              • @serpserpserp: I hope you succeed. House affordability has to be addressed (at this stage, purely by increasing the supply and ending negative gear, which no one will have the balls to do) so that everyone whose earnings are around the average can dream about having a decent/beautiful house, and hopefully get there (finish paying) in about 10 years.

        • Drive through Toorak in Melbourne. When you can afford to build for $60K-$150K per square vs what used to be $8K-12K, yeah shit is nice.

          Nice builds cost heaps of money and time.

          To be honest they need to just outright ban the use of polysterene cladding - because that is the one that looks bad and people do not maintain it.

    • +13

      We went down the pre-fab offices/accomodation route at work.

      Turns out after getting the utilities correct, transporting, assembling, fitting out it only came in some 15% cheaper than if we'd undertaken a stand alone build and its admittedly an inferior outcome.

      • +1

        15% on original budget is a fantastic result. You need to consider the time saved going down the prefab route. If you build it traditionally you have more build time which just lends itself to delays and cost blowouts. You always end up spending budget plus contingency plus extra.

        But yeah, you can't get away from prefab looking like a prefab build

        • +1

          In hindsight we cut a lot of corners regarding room sizing, number of rooms, layout which turned out to be too much of a compromise. As in the place doesn't function as fluidly as if it were built to spec.

          If we had say an additional 3 months to design i would've 100% gone down the build option.

          • @Drakesy: And you would have paid a motsa for it! But yeah, you'd get closer to what you want.

            But you also cut corners, who is to say you don't do that on a build option because it will cost you more.

            • @serpserpserp: Oh this is including contingency (we have a lot of experience from the build cost perspective.)

              $600k for the demountables and setup or $720k for a fully designed & built area

    • Still has to be pre-built in a facility somewhere, which is a massive cost to get a big warehouse near a supply of workers. The big facility can be a more efficient production line, but only if done right, otherwise it will just bloat and be less efficient. Australia is absolutely terrible at mass production, so unlikely to achieve a well oiled efficient production line. A facility of that scale needs a corporation, and thats just layers and layers of bloat which your home office builders dont have, end up with more people in the office than on the tools.

      Then you still need the earthworks, logistics, cranes and skilled workers onsite.

    • +1

      Peeing in your pants to keep warm basically.

  • -6

    How long does it take to train people anyway, if we started now how soon could we have builders of varying skill levels? You don't need to go to builder university to know how to properly bring up a frame under the direction of someone who really knows what they are doing. If there's suddenly going to be billions of dollars spent on new houses then the market will probably produce more builders eventually.

    • +13

      A carpenter takes 5 years, they need to go to tafe plus apprentaship.

      A builder who's work you want on the tiktok inspector can be 'trained' in 6 months. It only takes 2 days to demolish their work also.

      You need at least 5-10 years of industry experience to be a builder and nowadays it is recommended to have at least a Cert 4 in building and construction.

      There isn't money being spent here at all, the government is telling councils to approve things faster and more, this means developers still need to want to spend the money to make plans and then engage a builder to build them.

      The government seems to be just wanting to win votes with this one. They will probably need to put in tax incentives and reduce land taxes for developers to start risking their capital at these interest rates.

      • +1

        People will buy the lots and put up houses yeah? They'll be spending money on new houses, instead of competing for existing ones.

    • +7

      I can tell you, from experience, there is a chasm in quality between a labourer and qualified tradesperson and then again between an apprentice or entry level working for a developer being paid per job vs a master being paid per hour.

      We use chippies with over 30 years experience, pay by the hour and get what we pay for. Average jobs might just nail and plate for expediency, our trades use housing joints.

      Australia's housing production capacity hasnt changed in decades. And you have to ask yourself, if you import workers, what quality and qualifications are you getting? I can tell you looking at some of the builds locally, the same 5 guys cant be all trades on a job. But apparently thats ok 👍

      • +2

        There's also a chasm between qualified with 30 years experience and qualified with 30 years experience.

        I've had plenty of jobs done poorly by experienced qualified tradies. It's the driving reason I do things myself, might take me longer but I'll do everything to do it right even with Australia pay walling most of the standards

        • And the standards can be found online via torrents etc. I agree, it seems to me a careful amateur willing to read up thoroughly can do the work to the same standard as trades, when it is their own home and they care about it.

    • +1

      Yeah its a s…show,
      I blame the gillard government for its decision in 2012 to remove university course caps and to market the idea that "everyone should go to university, regardless of their results", something still popular today

      If you remove competition from university places, you get more mediocre white collar workers (they didnt have to try at all), and steal everyone away from the pool of potential blue collar workers. I mean do you really want someone who has never passed a math test designing your plane or bridge

      Both blue collar and white collar workers need to be respected and have viable long term support and employment pathways. Instead we have governments that openly choose sides based on popularity (university over trades) and undermine domestic blue collar trade shortfalls with mass influx of cheap "skilled" labour from overseas.

      At the same time at universities you have underutilised graduates wondering why they did degrees (which they cant use), having to compete against hordes of other graduates in a limited job market.

      • +1

        "everyone should go to university, regardless of their results"

        AI is about to make university free, for most topics, in the next few decades. And covid already made it remote. So it's not a bad policy in hindsight.

  • +9

    And terrible building standards. Our insulation requirements are lacklustre.

    • +3

      The new energy rating requirements have taken care of that in all new builds.

      It has doubled - tripled the cost of insulation in a build. Cost of ceiling insulation goes from $1750 to $5000 in a normal house. Much needed IMO but once again additional costs that don't reflect in the sale price/builder margins. Government increases building standards and red tape and expects developers to just cop it. It comes to a point where they don't. That is now.

      • +3

        don't worry, the industry will find a way to dodge that
        and the govt/council building inspectors are pathethic

        • +3

          Yep, if you're buying new, might wanna check that the insulation is actually there… heard of people going in after with thermal imaging, and surprise, surprise, the builders 'forgot' to put insulation in various places.

  • +23

    If government wants to build all that - it's better to hire permanently own developers, trades, etc, rather to outsource everything as its doing it all the time.

    • -1

      Not with the way government departments run. Will end up with 10x the staff with 20x the payroll to do the same work as contractors. Plus pay 5x more for all the materials due to the overheads involved in supplying government tenders.

      • +2

        At least one of the tenders will be skipped :)

        Now with every tender contract government pays the winner:
        1. for management staff
        2. for workers
        3. for 'kickbacks'
        4. for materials

        Even one to be removed from this list it will be a huge savings.

  • +3

    Give it to chinese they managed to build a hospital in a week during covid.

    • -7

      It was probably fake. Just like most things were during covid.

    • +14

      Ah yes, that world-famous Chinese workmanship and quality… what could possibly go wrong?

      • +2

        I had a Chinese lady in my team a few years ago who was telling us about the earthquake that devastated the city she was from in China. Most of the buildings that collapsed were put up by the government, whereas many of the buildings built privately, didn't collapse. Government buildings had corners cut to cover all the kickbacks to officials and politicians and were very poorly built. It was bad - a school collapsed and killed all the children inside.

        I know Serpentza can be a bit of a knob but he does highlight some spectacularly shit goings on in China

        • He's also highlighted his fair share of fake news. He can't really be relied upon as he has a bone to pick

          • @Jackson: I agree. If you're going to believe something he claims, you need other sources too.

    • +4

      The much vaunted hospital was a series of prefab shacks, which have since been dismantled. A proper hospital is supposed to last 50 to 100 years.

      • For all the resources they could spent the same effort and build a 10,000 camp/cabin sites for quarantine etc etc… which they did with their crazy lockdown initiatives. Why do you think it got demolished so early… And oppose to keeping it as a piece of history.. Its probably so poorly build inside… etc et that a medical camp site would do a better job.

        Also a building DOES NOT MAKE A HOSPITAL . LOL .. its the people in it and the medical equipment in it.

    • +2

      For heavens sake stop using that as eg. why do you think they demolished it, its not fit for purpose … its jut for show only. And they realise building an empty shell building is no different that building camp/cabin. So best go with the cheaper route.

      Also did you not watch the make shift camp they build for the lockdown…Leaking and all… so many videos during peak for lockdown back then.

  • +13

    Who Is Going to Build Them?

    1)Gov call tenders.
    2)Builders apply
    3)Government pick the lowest bidder or some politician's relative

    • +12

      "Non compliant"! :)

      • +2

        Its a shamozzle!

    • This, with the skills shortage we're going to see workers from https://en.wikipedia.org/wiki/Tofu-dreg_project.

      ^Site inspections already showed this, using fake rip off materials and slapped together without thought of compliance.

      Will be another massive government shamozzle. I hold little hope it being done right.

  • +3

    Immigrants will build them. Young people these days have largely abandoned trades so we now have a shortage and need to import people.

    • +3

      And how is that working out?

      • +1

        Nope. The Liberal Party has decided immigration will be the issue at the next election. Try again.

        • +2

          Well they are talking it up but so far nothing I have seen by them indicates they will reduce immigration to sensible levels.

          • +1
          • @EightImmortals: What's wrong with the concept of skilled migration? Great countries are built on this.

            • @arislan: I never said anything about 'skilled' migration. It is the 'lack of skilled' migration that is of concern.

              • @EightImmortals: Ahh yea completely agree then - hard to tell there are folks that is just anti-immigrants of all forms period.

        • +1

          And nuclear but the ALP is also starting to feel the anger from the electorate from our open border policies and are starting to cut back on migration.

          Personally, I'll vote for whatever party reduces immigration the most.

          • @R4: One Nation is your ticket then.

            • @EightImmortals: Nope. Not them.

              • @R4: Funny how everyone says that?
                I point out that there's a party that has the same goals for the country as what the person does and they get all excited, and I say vote for One Nation and they go "Nope. Not them." I guess that's a testament to how well the machine has programmed everyone to hate Pauline I guess? Even sadder that their votes will go to people who are perpetuating all the problems we complain about. SO everyone just keep voting the same way you always have, it'll be different NEXT time, right?

      • +2

        what countries are we importing people from and what are the building standards and corruption levels over there?
        HAR HAR HAR

        • -1

          It doesn't matter where they're from, the crap that is getting built now is not that great.

        • That might be an issue, but even as it is with locals - there's all sorts of loopholes with our building standards/laws as well that builders are getting away with delivering lemons to aussies and getting away with it.

    • +12

      There is no shortage of tradesmen. Look how many have been laid off by companies going bust. Building costs and interest rates are too high so much less people renovating and building. This is a lie the govt is telling everyone so they can keep the immigration high.

      • +1

        They are employed again the next day, but they get screwed out of owed pay and entitlements and their own tools get locked up by administrators for 3 months.

        There is a massive demand around the capital citys for any competent qualified tradie.

    • correct. if they want to live here then build their own house.

    • Young people these days have largely abandoned trades so we now have a shortage and need to import people.

      I'd say they didn't abandon them, moreso the mining industry took the would be plumbers, electricians, carpenters, handed them keys to a truck/excavator and said go for your life.

  • +9

    Builders got to build. It's kinda how they pay for their kid's private school fees. What are all these guys "just finishing up" going to do now?

    In any case, all those guys employees are certainly staying in the industry. They'll just churn to the next business and keep building. It's hardly like we're looking at lines of unemployed plumbers queuing outside of Centerlink.

    Out my way, normally a developer will dribble out a new stage of 30-40 house lots every 2-3 months. Right now I can think of 8-10 estates that have instead just turbo charged their build out and decided to drop the whole 8-12 stage permit area as a single build, 300-400 plus lots each. The lots are selling so quick that the developers can't get them onto the market quick enough.

    Just look at the amount of red earth (sites stripped of grass) between Carolyn Springs and Melton along the Western Freeway right now. Not too dissimilar around Clyde North and Officer, although the grass grows back quicker there. Also see Armstrong Creek, south of Geelong. The Pakenham East PSP too has just opened up and right now it's wild-west land rush territory out that way.

    Nobody's downing their tools anywhere that I can see. There's more than enough work happening for anyone who wants it right now.

    The minute the temp fences come down the builders move right in.

    Certainly Stockland aren't worried about the state of the industry, having dropped a cool $1.3 billion just last December buying a bunch of half finished Lendlease estates.

    As to who's going to build them, the Victorian Government infrastructure pipeline was given a haircut this last budget. A lot of the guys working on projects like the Metro Tunnel and going to be looking for new things to do with themselves over the next couple of years.

    • +2

      I was more so who's going to develop these so called inner metro lots where you have 2-8 townhouses. Stockland doesn't do that. Lendlease is a mess and yeah they offloaded all their loss making plots.

      I was referring to the tradies doing more profitable jobs, not the low margin stuff the government thinks they can convince people to build. You're not going to convince developers to go from $60000/sq builds to $17000/square builds anytime soon. Yes, the instructure pipeline needed a haircut but those guys aren't the chippies, cabinet makers and brickies we sorta need. To be specific, I'm referring to houses and townhouses. I cannot see how the government thinks they can house everyone in apartment blocks if that is their intention?

      • +2

        It's an interesting point. I think it largely does indeed seem to be their intention that the government wants to see more high density options rather than a few extra battle axe blocks here and there.

        The government is not looking to use moral persuasion, they're setting targets for each local government area to achieve a certain level of housing stock. This is not to encourage councils to approve more builds - as I expect you know, most builds get approved as it is, and if they aren't approved by council most will get up at VCAT.

        Sadly, many 'developers' then try to on-sell the permits onto someone willing to actually build the things, which as you imply, sometimes works and sometimes doesn't. Either way, there are currently as many approved construction permits sitting idle in Victoria than are actually approved each year, if developers are looking to get stuck into things.

        The only real lever that councils have to pull is the planning scheme, and the easiest lever in the planning scheme is medium to high density.

        In the next decade I would reasonably expect to see a significant number of additional blocks around train stations, significant retail strips and major roads re-zoned for 3-6 story apartments.

        The main issue in practice will be that this will require a fair bit of consolidation of 800 sq,m lots, but the economics of being able to squeeze 15-20 apartments in there create lots of incentives for entrepreneurial developers.

        Politically, it's much easier to sell a smaller number of lots suddenly becoming significantly more valuable than a much larger number of lots in leafy Eastern Suburbs streets being knocked down to make room for a short run of two story townhouses.

        I actually agree that small-end builders are where the system is bottle necking, but that just seems to be a capacity issue. Once a new run of townhouses is posted on realestate.com.au they tend to sell pretty quickly. Certainly there aren't a lot of for sale signs staying up for more than a few weeks in any part of Melbourne that I normally pass through.

        If people's margins are tight in that situation they need to be reconsidering their margins.

        • +3

          One reason, and to be honest the main reason, is that a lot of these blocks were purchased pre covid. And since then the profits that were projected for these smaller developers have dwindled as the cost of construction wipes out the margin. So now you have more risk, less margin = no action.
          Everyone is in wait and see.

          It may be surprising but often smaller apartment blocks don't offer the huge margins as people believe they do.

      • Housing Victoria and Victoria Infrastructure Delivery Authority will likely take over the planning and delivery aspects. VIDA is essentially LXRP rebadged with the same people that do the rail crossing removal work. They've got access to planners and various trades.

    • +14

      Governments use our taxes to provide services, it's kind of the point. Government is not a profit making enterprise, so you listicle is entirely moot.

      Very little of what the government does makes money. Governments do what they do because many things that make for a better society cost money, and it makes for a better society when we can rely on the government to look after us if we fall on hard times.

      One of the things that homelessness brings is anti-social, criminal and often violent behaviour. One of the things that public housing provides is a stable base to get a person on hard times back on their feet and back into being a constructive member of society.

      Furthermore, many of the people in public housing are victims of domestic violence, the disabled, retirees who've lost everything in a divorce or where their business went under, and the like. It is just fundamentally inaccurate to imply that the vast majority are any different from anyone else in society. They're just regular people doing it tough.

      Furthermore, the cost to society of providing housing to the disadvantaged is a hell of a lot less than the cost of locking them up in prison when they end up having to steal in order to pay for a roof over their heads.

      • +7

        Thoroughly agree with all five points above.

        More specifically it is better to get people on their feet and to learn how to fish, rather than throw them into prison.

        • -5

          They won't learn 'how to fish'.

          All they will learn is to rely on handouts even more.

      • +3

        This all sounds very righteous. I must admit I know very little about how public housing is assigned and the selection criteria required to be granted public housing etc. Perhaps someone can explain how the system works to me. Personally I've encountered families who have lived in quite lovely inner city public housing for generations although they're hardly on the breadline. In one instance one family lived happily in public housing whilst collecting rent on their multiple investments accumulated over the time while living in the public housing system over the past 40 odd years. I've heard of some who are no longer in need of their public housing and let grandchildren or friends or relatives live there or sublet it to tenants or overseas students. I have no idea how this system works but it certainly doesn't seem fair. And this is just one case in one city in one state. There are likely thousands of such rorts going on all over the country. This is my experience of public housing and is just another example of the bureaucratic bungling that goes on in the government and how much money is wasted no matter how noble their goals are to support those who truly need help. So many people rort the generous social system which is supposed to support those who really need help. It angers me and validates my low opinion of all government processes and functions when this kind of wastage can go on for generations. When it comes to government wastage of public money, nothing surprises me any more.

        • Your experience of public housing seems to be limited to a loaded, hyperbolic, one-sided collection of second and third hand anecdotes and assumptions, such that I wonder whether much of your experience is actually derived from watching A Current Affair and reading The Herald Sun rather than anything approximating actual reality.

          Frankly, the idea that there is some sub class of public housing tenants inheriting sixth floor two bedroom apartments in the Collingwood high rises while building up massive negatively geared property portfolios is disturbingly far into tin foil hat territory. The fact that you have actually had a deep conversation with these people about their investment decisions moves the whole anecdote from tin foil hat territory into actual alternate reality.

          • +3

            @AngoraFish: These aren't anecdotes. I know these people personally. Yeah I get it. I wouldn't believe it either. You should probably also learn to read properly though you're a fish so I'll let that go. I never said I had any deep conversation with these people about anything. And I'm not from Melbourne. So stick that into ya!

            • +1

              @nudy: If you want to do something about it, how about you report them?

          • @AngoraFish: Its not anecdotal that there are some public housing due to historical reasons are in, by today's standards, affluent suburbs. The recently repurposed one in Walsh Bay is an example - if you followed the news when this broke you can hear the objections of those tenants and the claims of them living there with across "generations"

            However, i do note, these are typically exceptional cases. As is with everything else, only the negative side of things typically get reported - so people tend to use that and generalize especially if they don't have the whole picture.

    • +9

      I live next to housos and yeah, they are utter garbage. Housing people is cheaper than dealing with medical issues caused by homelessness so we need government housing. The people who run the unit blocks need to start kicking out the shitty people and behave like landlords. Imagine trying to rent anywhere after being kicked out of government housing. That risk may be enough to straighten up a small number of the tenants.

      And yes, there are good people living quietly in government housing, even in lower social economic areas. I spent seven years in government housing. I hope I never have to return.

    • -2

      public schooling is a waste of taxpayer money.

    • +11

      Very ignorant take. Just because successive governments have stopped investing in public housing does not mean the need for public housing goes away. A classic neolib myopic view, you propose that government owned assets are a waste of public money, with zero thought about the alternative you promote.

      Instead of the government building - and owning - public housing blocks - an asset, the government pays prople rent assistance, and owns nothing in return.

      The government now pays more in rent assistance than it invests in public housing. Money to slum lords.

      • +3

        This post is way to accurate for the kids on here to understand

      • +7

        The government now pays more in rent assistance than it invests in public housing. Money to slum lords.

        Always the same playbook with these people. They always demonise giving money to people in need (or wasting money in the public sector), but with seemingly zero irony, have no problem with siphoning even more money to their rich mates in the process:

        Rent assistance - landlords end up with the money instead of it going to public housing
        Cashless welfare - rich mate with a credit card company get more than the welfare recipient
        Job Seeker - dodgy job providers paid to harass people and run useless 'courses' instead of it actually going to people in need

        Not to mention, if the government had invested in more public housing 20 years ago, the current land value of the portfolio would've increased way more than whatever 'waste' the person above is whinging about like maintenance.

    • +3

      damn @tsunamisurfer why not just round them up in camps?

      • +1

        We can put them to work too! Just like the CCP does to the Uyghur

        • We could even remove 'undesirables; from houses and send them to the camps too! That would free up more housing for investment

  • +17

    The targets are never meant to be met just political announcement just watch Utopia. The housing target has never been met just look at the airport rail link, how many years has it been?

    • That's accurate!

    • +4

      When was the last time any government met a target they set??

      The entire Australian political system is built around the shortsighted election cycle.

      • +1

        That is because the majority of voters are interested in whats in it for them here and now. That doesn't exonerate the politicians who should be trying to do whats best for our future rather than the next election, but we are getting exactly what we are demanding of them.

  • +4

    We have lots of sites with plans approved, but will most likely sell them.

    Pretty sure that's exactly what the government wants. More stamp duty, lower land prices, land goes into the hands of people more willing to build and aren't going to sit on them out of fear of current market conditions. If the price gets low enough, someone will buy it develop it.

    Is it fair? No. It's basically their shortcut to look like they're doing something.

    Personally I wish an independent body took over all council powers of building and zoning, firstly to stop corruption but also to stop stuff like preventing development in wealthier suburbs to increase density because the locals don't like it, sales to developers who slowly dole out land to keep prices high and so forth. There's too many fingers in the pie to actually grow housing sensibly otherwise. Granted, that everyone is basically corrupt makes me think my idea is probably a bit idealistic. There's simply too much money in property.

  • +3

    Don’t forget they are lying to everyone saying it’s a lack of tradesmen so we need to import thousands of “tradesmen” from other countries. This way, they can keep immigration high. It’s all a lie.

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