- Factors such as HomeBuilder, and natural disaster repair has increased demand for materials
- Currently, there is a significant shortage of timber and steel
- Many houses have seen costs risen mid-construction due to material shortages
Thanks to the housing boom and a limited supply of materials, the cost of construction in Australia continues to soar, which Abode Construction director, Justin Andrews, describes as a “perfect storm”.
The Brisbane-based Abode Construction cites factors such as the HomeBuilder grants, relaxed mortgage lending criteria, early access to superannuation, and record low-interest rates that have all contributed to the surge in demand for house materials.
In Queensland, factors such as interstate migration and natural disaster insurance repair work – which Abode believes monopolises trades such as roof installers and carpenters – make the situation even worse.
On top of this, supply chain disruptions have caused the delay in imported materials. This includes timber and steel, which are in demand in the United States, where a building boom is also occurring. Exporters are willing to supply to the highest bidders, so, many American builders simply outbid others, including Australian companies.
“We have received sudden price increases with practically next to no notice on almost all building products we use. Real estate valuers do not see that the house is worth more simply because the costs of construction have increased.”
Justin Andrews, Abode Construction
The rising costs have become so significant that some builders have added special conditions or provisional sums in contracts to deal with the rising costs, however, many of these contracts subsequently get rejected by mortgage lenders and banks.
Special conditions such as these are often not legally enforceable due to legislation that mandates you must have certainty in domestic building costs with very little wriggle room in terms of exceptions.
Mr Andrews acknowledges that while there will be small fluctuations over time due to macroeconomic factors such as inflation, he expects the cost of materials to not return to pre-HomeBuilder levels any time soon.