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How a booming demand for tradies could send builders broke

Home builder Tamawood said inflation in the industry had blown out so much that subcontractors were earning about double the income of 18 months ago and materials had increased by up to 100 per cent.

Nov 05, 2021, updated Nov 05, 2021
Housing was being impacted by a lack of engineers and planners (file photo)

Housing was being impacted by a lack of engineers and planners (file photo)

The Brisbane company said the situation had become so bad that a boom in building may have the effect of sending some companies broke.

Chairman Robert Lynch said a worker shortage had also led to a blowout in costs for materials and a housing boom that was fuelled by Government grants.

He said industry bodies that had “clamoured” for the grants must take the blame.

“We are definitely not experiencing a 2 per cent core inflation as reported by the Reserve Bank,” he said.

“The sub-contractor shortage has seen significant rate rises as licensed trades people have been able to auction their services to the highest bidder.

“Sub-contractors are now able to earn the same money working three days a week versus five or six days a week 18 months ago, which is exacerbating the shortage.

“The shortage is worsened by the four-year apprenticeship system in Queensland and, as a result, builders are now delaying projects. In some areas the situation is at breaking point where it is likely that some builders who have not put sufficient plans in place will not survive.”

He said the increase in government infrastructure spending had inflated the problem and shipping delays had created shortages in building materials.

Lynch said the company had been forced to withdraw from some areas where it was difficult to source labour.

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“We are also limiting the number of contracts we enter into _ to levels we are comfortable we can deliver.”

The cost increases included a 100 per cent boost to the price of timber, steel from Blue Scope was up 69 per cent, steel frames were up 28 per cent and floor coverings increased by up to 20 per cent. The company expected further rises in January.

But the upside for the company was that was able to increase profits by 44 per cent in the last financial year.

 

 

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