Latest news with #TomDevitt
Herald Sun
4 days ago
- Business
- Herald Sun
Locked out: Generation faces housing crisis catastrophe
Australia's housing affordability crisis has reached code red status as runaway construction costs threaten to permanently lock out a generation of potential homeowners. A new analysis reveals a construction sector in turmoil, with renovation expenses surging a staggering 43 per cent since late 2019 and building material prices remaining stubbornly elevated, sitting 35.4 per cent above pre-pandemic levels. The crisis, driven by a perfect storm of crippling labour shortages, supply chain disruptions, and soaring prices for essential materials is prompting urgent calls for government intervention to prevent a full-blown housing catastrophe. Exclusive data by the Housing Industry Association shows essential materials are bleeding budgets dry, with the cost of copper pipes and fittings skyrocketing by 14.4 per cent annually and 63.4 per cent since the end of 2019. The cost of electrical cable and conduit are equally alarming, jumping 9.5 per cent annually and a shocking 69.7 per cent since the end of 2019. Even the humble clay brick, a cornerstone of Australian construction, has surged by 8.3 per cent annually and 48.4 per cent since the end of 2019, while timber doors rose by 7.4 per cent annually. RELATED 17,000 ads: Aussie tradie jobs no one wants Demolition dilemmas: Aus homes under threat Build new for less: Top spots under $850K revealed Only materials like plywood, steel beams, plastic sanitary ware, reinforcing steel, sheet metal and other electrical equipment saw a reduction in cost between 4 per cent and 9 per cent. However, it's a drop in the ocean, considering the cost of skilled labour, which saw a 5.5 per cent increase over the 12 months to March, with those looking to build now paying 35.5 per cent more for a home than they did pre Covid. To put it in numbers, the average national build cost now is $484,315, according to March figures by the Bureau of Statistics, $18,832 more than the previous year and $152,969 more since pre-Covid in 2020, when the average build cost just $331,346. HIA senior economist Tom Devitt said while the numbers looked bleak, the cost of construction material was starting to stabilise. 'Some of the numbers shared do show a few materials are still going up really rapidly…but the average building materials have actually really slowed. They are still very much elevated from five years ago but they do look like they've stabilised. 'Labor costs are also still increasing quite rapidly but also not as much as they did three years ago. Our trade report two or three years ago had a single year where trade prices went up 10 per cent.' Mr Devitt said while the cost of materials would come down with time, the real concern going forward was ongoing labour shortages. 'The demand is still going to be outstripping the supply of trades unless the government follows through on what they've been paying lip service to in terms of fast tracking in-demand construction trades,' he said. '(So far) nothing has really progressed from that because the number of skilled trades that have been arriving, relative to overall overseas arrivals, has been minute.' The hidden cost behind Australia's homebuilding struggles An analysis by NextMinute, a leading project management software for tradies, recently shed light on the occupations with the highest vacancy rates and the most job ad listings across Australia, revealing a stark disparity between supply and demand in the trade sector. Official figures indicate that motor mechanics, electricians, and welders are among the most sought-after trades, with thousands of vacancies across all Australian states. However, SEEK job ad volumes suggest the demand is far greater, with listings for electricians alone exceeding six times the official vacancy count. Similarly, there are 9749 listings for mechanics and 2706 for welders, reflecting widespread recruitment challenges in the industry. Despite attractive salaries, several trades remain under-represented in global job searches, such as airconditioning and refrigeration mechanics, who earn over $2000 per week. The United Kingdom leads overseas demand, with UK-based workers conducting thousands of monthly searches for Australian trade jobs. NextMinute CEO Alex Jenks said the discrepancy highlighted the ongoing recruitment challenges faced by trade businesses. These shortages are slowing down projects, driving up costs, and putting pressure on business owners,' he said. 'Interestingly, the countries showing the most interest don't always align with the trades in greatest need. 'For example, airconditioning and refrigeration mechanics have over 500 official vacancies, but little international search activity, pointing to blind spots in global awareness of Australia's workforce needs.' Australia needs to think modular With Australia forecast to fall 262,000 homes short of its national 1.2 million housing target by 2029, Ray White Group senior economist Nerida Conisbee said a modular approach was needed to address ongoing construction concerns. 'It's taking things like trusses off site and making it more of a manufacturing process, as opposed to building them on site where you need far more skilled labour,' she said. 'Another example would be kitchens and bathrooms which are really time consuming and expensive to build on site. So if you just have to assemble them within a house, that makes it a lot cheaper…everything else can be done offshore. 'Another thing to look at would be the way we design houses. One of the reasons why it's so expensive to build is because Australians really love their houses to be different from their neighbours. 'And so, if we're looking at new areas, if we're starting to build houses that are very similar, then it becomes a lot quicker and cheaper to build houses.'
Mercury
4 days ago
- Business
- Mercury
Locked out: Generation faces housing crisis catastrophe
Australia's housing affordability crisis has reached code red status as runaway construction costs threaten to permanently lock out a generation of potential homeowners. A new analysis reveals a construction sector in turmoil, with renovation expenses surging a staggering 43 per cent since late 2019 and building material prices remaining stubbornly elevated, sitting 35.4 per cent above pre-pandemic levels. The crisis, driven by a perfect storm of crippling labour shortages, supply chain disruptions, and soaring prices for essential materials is prompting urgent calls for government intervention to prevent a full-blown housing catastrophe. Exclusive data by the Housing Industry Association shows essential materials are bleeding budgets dry, with the cost of copper pipes and fittings skyrocketing by 14.4 per cent annually and 63.4 per cent since the end of 2019. The cost of electrical cable and conduit are equally alarming, jumping 9.5 per cent annually and a shocking 69.7 per cent since the end of 2019. Even the humble clay brick, a cornerstone of Australian construction, has surged by 8.3 per cent annually and 48.4 per cent since the end of 2019, while timber doors rose by 7.4 per cent annually. RELATED 17,000 ads: Aussie tradie jobs no one wants Demolition dilemmas: Aus homes under threat Build new for less: Top spots under $850K revealed Only materials like plywood, steel beams, plastic sanitary ware, reinforcing steel, sheet metal and other electrical equipment saw a reduction in cost between 4 per cent and 9 per cent. However, it's a drop in the ocean, considering the cost of skilled labour, which saw a 5.5 per cent increase over the 12 months to March, with those looking to build now paying 35.5 per cent more for a home than they did pre Covid. To put it in numbers, the average national build cost now is $484,315, according to March figures by the Bureau of Statistics, $18,832 more than the previous year and $152,969 more since pre-Covid in 2020, when the average build cost just $331,346. HIA senior economist Tom Devitt said while the numbers looked bleak, the cost of construction material was starting to stabilise. 'Some of the numbers shared do show a few materials are still going up really rapidly…but the average building materials have actually really slowed. They are still very much elevated from five years ago but they do look like they've stabilised. 'Labor costs are also still increasing quite rapidly but also not as much as they did three years ago. Our trade report two or three years ago had a single year where trade prices went up 10 per cent.' Mr Devitt said while the cost of materials would come down with time, the real concern going forward was ongoing labour shortages. 'The demand is still going to be outstripping the supply of trades unless the government follows through on what they've been paying lip service to in terms of fast tracking in-demand construction trades,' he said. '(So far) nothing has really progressed from that because the number of skilled trades that have been arriving, relative to overall overseas arrivals, has been minute.' The hidden cost behind Australia's homebuilding struggles An analysis by NextMinute, a leading project management software for tradies, recently shed light on the occupations with the highest vacancy rates and the most job ad listings across Australia, revealing a stark disparity between supply and demand in the trade sector. Official figures indicate that motor mechanics, electricians, and welders are among the most sought-after trades, with thousands of vacancies across all Australian states. However, SEEK job ad volumes suggest the demand is far greater, with listings for electricians alone exceeding six times the official vacancy count. Similarly, there are 9749 listings for mechanics and 2706 for welders, reflecting widespread recruitment challenges in the industry. Despite attractive salaries, several trades remain under-represented in global job searches, such as airconditioning and refrigeration mechanics, who earn over $2000 per week. The United Kingdom leads overseas demand, with UK-based workers conducting thousands of monthly searches for Australian trade jobs. NextMinute CEO Alex Jenks said the discrepancy highlighted the ongoing recruitment challenges faced by trade businesses. These shortages are slowing down projects, driving up costs, and putting pressure on business owners,' he said. 'Interestingly, the countries showing the most interest don't always align with the trades in greatest need. 'For example, airconditioning and refrigeration mechanics have over 500 official vacancies, but little international search activity, pointing to blind spots in global awareness of Australia's workforce needs.' Australia needs to think modular With Australia forecast to fall 262,000 homes short of its national 1.2 million housing target by 2029, Ray White Group senior economist Nerida Conisbee said a modular approach was needed to address ongoing construction concerns. 'It's taking things like trusses off site and making it more of a manufacturing process, as opposed to building them on site where you need far more skilled labour,' she said. 'Another example would be kitchens and bathrooms which are really time consuming and expensive to build on site. So if you just have to assemble them within a house, that makes it a lot cheaper…everything else can be done offshore. 'Another thing to look at would be the way we design houses. One of the reasons why it's so expensive to build is because Australians really love their houses to be different from their neighbours. 'And so, if we're looking at new areas, if we're starting to build houses that are very similar, then it becomes a lot quicker and cheaper to build houses.'
Sydney Morning Herald
13-05-2025
- Business
- Sydney Morning Herald
How the cost of building a new house just hit a record high
He also warned that the construction workforce is not large enough to build enough homes to meet the federal government's target of 1.2 million new homes in five years, and the ongoing infrastructure projects such as roads, schools and hospitals. Not enough new workers were joining the industry, he said, especially as experienced workers retire or semi-retire. 'When you don't have enough workers, what happens? Workers go to the highest bidder and that means if you're going to go ahead with your project, you're going to be paying much higher wages.' He said the cost of materials was generally much higher than six years ago, especially for timber, ceramic goods and electrical equipment. But he thought it unlikely labour costs would decline, especially as some of the larger unions negotiate increases in wages from year to year. Loading Housing Industry Association senior economist Tom Devitt said the recent rise was largely due to labour cost increases, while the unemployment rate holds at historic lows. 'The shortage of skilled trades for construction sectors is particularly acute,' he said, calling for a boost to domestic workforce capabilities as well as skilled migration. He noted changes to the National Construction Code to improve energy efficiency, which he thought was a worthwhile objective, but said it resulted in costs that were passed on to home buyers. He added that the figures on the cost of building did not include the rising cost of land. Despite the national target of 1.2 million new homes in five years, Devitt forecasts that the nation will struggle to deliver a million in that time frame. 'It doesn't bode well for affordability, especially for home buyers.' Sydney builder Robert Faraj, director of Pioneer Building Group, has been dealing with the impact of rising materials costs on his projects. For example, he made an order of plasterboard in mid-February. It was delivered on March 2, but on March 1 the supplier increased prices by 7 per cent, leaving him paying the March price. That meant it cost $40,000 for enough plasterboard for four, four-bedroom houses. The product usually increases in price four times a year. Electrical cable for light switches has increased, too, among others. 'It didn't jump $95 or $100 in a week. Every second month [the suppliers say] 'Oh hey, 10 per cent, 10 per cent, 10 per cent,'' he said. But to maintain his reputation and the quality of his work, he does not want to look for the cheapest quote. He focuses on high-end, bespoke, luxury-built homes as well as commercial construction. 'You're judged on your worst job, not your best job, so we're always trying to maintain a standard and a value of what we give our clients,' he said. He also can't charge clients more once they have agreed on a price for a build. 'How? They can't go back to the bank and say, 'hey bank, Robert said the plasterboard has gone up.'' As a result, he does not see quite as much work available as previously. 'Everyone's saying it's not worth it, so we're not seeing as much come through the pipeline of approvals of work,' he said. 'We've got some really good tradies in this country and most of them are busy at the moment doing all these tunnels.'
News.com.au
06-05-2025
- Business
- News.com.au
Victorian home approvals fall as new unit pipeline plunges, builders raise fears of government targets
Victorian home approvals plunged in March, with the number of apartments, houses and units being green lit by authorities dropping by more than 1500 from February. It comes as building industry insiders have revealed they now fear what will happen if new home construction does eventually rise in line with government hopes — with many still falling into insolvencies as a result of the nation's last building boom in 2021. Latest Australian Bureau of Statistics data shows in original numbers there were 2655 houses approved in March, down by about 200 (7 per cent) compared to the month prior. Unit approvals were vastly lower, tumbling from 2294 in February to just 671 the following month. For the 12 months to the end of March there were 56,000 new homes approved across the state, a substantial uptick from the 51,150 given the nod by planners in the prior year — and the best annual figure since 2023. Housing Industry Association senior economist Tom Devitt said the numbers were far below the about 75,000 new home approvals needed for Victoria to cover its share of the nation's 240,000 a year target under the National Housing Accord's 1.2 million extra homes goal by 2029. Mr Devitt said the numbers were not expected to improve in April, and it could take some time for the apartment pipeline in particular to rise. AS a result, the economist said HIA was not anticipating Victoria would move past 65,000 home approvals in any year remaining within the Accord's timeline — unless there were substantial changes to federal and state policies around housing, and an increase in skilled migration for building industries. Sustainable Homes Melbourne director Simon Clark said he was becoming concerned about how the industry would cope if government targets were to be hit. 'There may be builders who will get more work, but there will be others scared off by the amount of insolvencies,' Mr Clark said. 'And there's just less builders to build the homes, now. 'Once that picks up, I don't know where that work force will come from.' Latest Australian Securities and Investments Corporation data shows 2854 construction firms went into external administration from the start of this financial year to April 20. There were 2319 in the same period of the prior financial year, and 1695 in the 12 months ahead of that. Numerous builders who signed fixed contracts with home buyers as part of the HomeBuilder scheme were caught out when substantial cost hikes caused by material shortages drove up the cost of producing a home in a matter of months. The latest ABS data shows Victoria's average house build now costs $517,000 — up from $484,000 a year ago and far above the $363,000 typical cost in March 2020, just before the pandemic. Mr Clark, whose own business is more skewed towards extending existing homes to make them more sustainable and typically handles 10-12 a year, added that with heavy numbers of insolvencies, he would anticipate new houses would face price rises if there were not sufficient numbers of builders. Mr Devitt said while HIA believed builders would have a better understanding of their capacity from the last building boom's fall out, it wasn't surprising that some would be fearful of what would happen to them if there was a surge in activity and demand. 'Given the boom that they have come from over the past few years, it's fair to worry about what the future holds,' Mr Devitt said. 'But our current forecasts aren't for the big a big boom compared to what we saw during the pandemic.' Mr Devitt said the industry fears were another reason the federal government needed to allow for more skilled trades migration in the construction sector.
