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Home building costs increase fastest in 20 years as tradie demand doubles

Business

Home-building costs have increased the most in more than 20 years and the demand for tradies has doubled.

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According to the Cordell Cost Index, compiled by CoreLogic, building raw materials increased 3.8 per cent for the September quarter as new builds skyrocketed and supply chain issues delayed key products.

And it was unlikely to change in the near future with expectations that the high prices could continue for another 12 to 18 months.

The higher construction costs were likely to add to affordability challenges already at play across the established housing market, according to CoreLogic.

The biggest ever increase in building costs was after the introduction of the goods and services tax when costs jumped 7.2 per cent. If that structural change was set aside the September quarter growth of 3.8 per cent was the highest on record.

Nationally the annual increase was 7.1 per cent, the highest yearly growth rate since March 2005. Queensland’s annual cost increase of 8 per cent was the highest in the nation.
CoreLogic research director Tim Lawless said the surge in dwelling approvals, which peaked in March, was now progressing through to construction, causing widespread demand for materials and trades.
This increased construction activity has coincided with a disruption to supply chains and had placed further pressure on the building industry, which was dealing with a severe shortage of materials.
“The quarterly rate of growth in construction costs is happening everywhere and is not restricted to one city or state, it’s a national trend,” he said.
“For anyone who is looking to build or to renovate, or for someone who owns a business involved in the residential construction industry, it means they are all likely to be facing significantly higher costs.
“This doesn’t look like a short-term spike, the surge in construction costs is due to the amount of construction activity that’s been approved at a time when we can’t import more skilled labour and are facing significant supply chain disruptions.

The data coincided with a report from SEEK showing that job advertisements for carpenters were up 166 per cent.

Job ads in the automotive industry were also at high levels. Ads for mechanics were up 55 per cent, panel beaters 60 per cent and spray painter 68 per cent.

Surveyor ads were up 98 per cent while in the health sector dental receptionist jobs were up 120 per cent.

Education leader ads were up 190 per cent and outside school hours care educator ads were up 162 per cent.

 

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