The latest economic figures released for the NSW residential sector* have revealed a mixed picture – not quite the best of times and yet, not the worst of times either.
These conflicting sector results show a marked increase year to date for Building Approvals for Detached Housing – but also a decline over the same period for Approvals for Units & Apartments.
- Total detached houses approvals for January 2021 were 2,258 (an 18.3% increase from January 2020)
- Total unit/apartment approvals for January 2021 were 1,596 (a 14.3% decrease from January 2020)
The buoyancy of the detached housing market can no doubt be attributed to the Federal Government HomeBuilder stimulus package, which saw an increase in contracts in December 2020 and a likely increase in contracts in March 2021.
The MBA has reported that for civil construction works to the September 2020 quarter – $5.4B worth of works started, $6.2B worth of works performed and $16.96B worth of works yet to be performed; with the breakdown of the works to be performed as follows:
- Roads – $6,761.4 ($M)
- Other Transport – $4,461.6 ($M)
- Electricity – $2,749.4 ($M)
- Water & Sewerage – $1,051.9 ($M)
- Telecommunications – $29.5 ($M)
- Heavy Industry – $1,576.7 ($M)
- Recreational & Other – $327.6 ($M)
Design and Building Practitioners Act 2020 (NSW)
Looking forward, the Design and Building Practitioners Act 2020 (NSW) will commence from 1 July 2021. The operative regulations were published on 9 April 2021 and industry stakeholders should ensure their systems are ready to adjust to the new upcoming regulatory environment.
Key features of the legislation include mandatory compliance declarations for building elements and performance solutions at the design and construction phases of multi-storey residential apartment construction projects, with lodgment of compliance documentation through the NSW Planning Portal at four key phases being:
- Prior to commencement of works
- When building works are varied
- Prior to issuance of the Occupation Certificate
- 90 days after the issuance of the Occupation Certificate
Security of Payment Act 1999 (NSW)
From 1 March 2021, all NSW residential builders can now use the Security of Payment legislation in the event of a payment dispute. Previously the paper-based adjudication system contained in the Security of Payment legislation was only available for commercial buildings, investment buildings, or sub-contractors across all projects. This change will be welcomed by residential builders who now have a mechanism to recover payments in the event of a dispute in much quicker time than through a litigated pathway via the Tribunal or Court system.
Click to watch our SOP webinar presentation, in which we explain:
- Key facets of the Act
- What it is
- How to organise Payment Claims and Schedules
- Tips and traps to watch out for
Do you know the differences between your State Security of Payment Regimes?
As demonstrated in the recent decision in the Queensland case of Civil Contractors (Aust) Pty Ltd v Galaxy Developments Pty Ltd & Ors; Jones v Galaxy Developments Pty Ltd & Ors  QCA 10, it is important to be aware of the strict timeframes set by your States’ Security of Payment regime – as it may result in an adjudication decision being made void and could cause a claimant to lose their right to payment under the relevant Act.
Click to read Nexus Construction’s review of this decision.
Courts and Tribunals
The Victorian Court of Appeal has handed down its decision in the application for leave to appeal from the decision of VCAT in the Lacrosse Apartment fire litigation**. The application for leave to appeal was largely unsuccessful and the Court of Appeal agreed with the interpretation of the relevant BCA in place when the apartment was constructed and found that the ACP used was not compliant with the BCA. Ultimately the appeal which will now proceed may result in an adjustment of the apportionment of damages between the consultants in the first instance and it remains to be seen to what extent the apportionment will be altered.
Click to read Nexus Construction’s previous Combustible Cladding Update regarding Victoria prohibiting the use of ACP containing greater than 7% polyethylene
What the market will face over the next Q2 -H2?
In our opinion, the construction sector will remain a key driver for the economy and is likely to remain robust over Q2 – Q4 in 2021.