The Hunter chair of the Property Council has delivered a blistering assessment of the state of the building industry, saying the NSW government has "no chance" of meeting its housing targets. Neil Petherbridge told a recent Urban Development Institute of Australia function in Newcastle that developers were struggling to find builders to complete projects and government attempts to speed up housing supply and restore trust in apartment construction faced huge challenges. "What we have got now is some very capable large builders who are walking away from doing class two [multi-unit residential] buildings because they don't want to work in that risk environment," he said. "We've got engineers doing the same. I've had engineering firms ring me up and say, 'Come and take over my business. I'm 65 years old. I'm not dealing with this. I'm not going to get registered. It's too hard. It's too much risk. I'm not doing it.' "I've got a developer sitting next to me here who, I can assure you, and there's others in the room, cannot get builders to come and build their projects because they're just not interested in doing it. "Now we've got second-tier builders not capable of doing larger jobs coming up trying to fill that space and then they're going bust. "I'm not sure it's all peaches and cream here at the moment." Mr Petherbridge was among 140 guests at the UDIA lunch, where Matt Press, an executive director of compliance and dispute resolution for Fair Trading and SafeWork, was the keynote speaker. Mr Petherbridge's withering assessment received a loud round of applause from the building and development industry representatives in the room. UDIA chief executive Steve Mann, who was hosting the function, said Mr Petherbridge's opinions were "smack on". Premier Chris Minns announced in May that his government would set up a state building commission by the end of the year to oversee and regulate the construction industry. "NSW will have greater density and more apartments," Mr Minns said at the time. "To do that properly there needs to be greater confidence in buildings in NSW." The previous government appointed David Chandler as building commissioner in 2020 after the high-profile Opal and Mascot tower apartment failures. Mr Chandler told the UDIA lunch via a recorded message that the NSW Building Commission would start on December 1 to regulate the industry and enable more housing. "We believe there's enough in the industry's capability right now to deliver the higher buildings, but we think we're going to run into a real gap in the under-six-storey space," he said. Mr Minns announced last week that planning authorities in Sydney would "fast-track" apartment developments up to six storeys which used pre-approved "pattern book" designs. The government will run an international competition for architects to help design the endorsed plans. UDIA regional director Elizabeth York said the UDIA was "pushing to make sure the pattern book and complying development pathway for medium density will apply to the entire state". "It would make no sense to exclude regions like the Hunter, where the benefit of a pre-approved design could speed up the delivery of much-needed medium-density housing," she said. Mr Petherbridge said waterproofing remained a significant problem in apartment construction. "The concern I have, coming at it from a practitioner's point of view and seeing developers and builders in the industry and what's going on, is that prior to this building commissioner being appointed 60 per cent of every defect in new buildings was waterproofing issues," he told the UDIA lunch. "We still have a situation now where nobody is registered to do waterproofing. There is no registration system for a waterproofer and yet that was the biggest defect, so we haven't addressed that." Mr Press said a survey two years ago had shown waterproofing was the number one issue in buildings less than six years old, but a recent follow-up survey had shown waterproofing defects in the "current crop of buildings" had decreased significantly. "I don't think waterproofing is solved, but from what we see in our audits in terms of how people are approaching waterproofing and thinking about waterproofing, it's becoming much, much less of an issue, and that seems to be backed up by what owners' corporations are experiencing," he said. "We see something like a 20 per cent decrease in the prevalence of waterproofing [problems] from that survey." Under the national housing accord, the federal government has set a target of building a million new homes between mid-2024 and mid-2029. The NSW government has a target of 45,200 homes a year for the next 20 years. The state government's approach to improving consumer confidence in off-the-plan sales includes pushing developers or builders to pay for 10-year defect insurance. The private insurance is designed to replace a system which forces developers to pay a 2 per cent bond to cover any defects revealed in an inspection 18 months after a building is finished. Mr Petherbridge said the new defect insurance was a "straight 2 per cent on-cost across the development that you don't get back". "At least with the bond scheme, if you did the right thing, you got the money back, so that's a straight cost on providing housing," he said. "I think there's a lot of issues, and the supply targets you're talking about, we've got no chance." He said Newcastle's mine grouting fund had been "wiped out in the stroke of a pen" in the September state budget. "You've got projects we can't get to stack up, greenfield can't get through from biodiversity [offset legislation] and RMS not investing any money. "I don't know how you're going to get it done."