Rising costs worry 95% of builders

More than 9/10 tradies are worried about the rising cost of doing business, says a new report by the Registered Master Builders Association

The survey collected answers from more than 1,200 sector participants and homeowners who had built or completed a significant renovation in the last three years.

Despite strong demand across the industry, 95% of respondents are concerned about cost escalation. New legislation relating to the amount of insulation required for new build homes has been cited as a reason why costs could rise.

“We will have to pass costs onto the customer as increasing the amount of insulation in homes will make it more expensive to build,” said Versatile Homes franchisee Brad South.

Guy Richardson, general manager of Sentinel Homes, said he’s worried that smaller operators will suffer.

“Smaller installers who operate out of a van could be priced out of business because they’ll need to upgrade their vehicle to a truck and increase their working capital from $2,000-3,000 to $7,000-8,000.”

Long-standing issues

Furthermore, 96% of respondents are worried about supply chain disruption, product availability and the increase in product substitution.

“Additional costs and project delays are the consequence of the pressures facing the sector, and in turn these are causing a rise in the number of customer complaints and disputes,” said Master Builders Chief Executive David Kelly.

Skill shortages were mentioned by 67% of people as a critical challenge facing the sector. Some builders feel that a more favourable immigration climate would help ease staff worries.

“Even when the borders are open, one thing that makes it difficult for us to fill our positions is the wait time for visas,” said Summerhill Construction director Peter Swain. “If the government could process those quicker, we’d have a chance to fill up the backlog of work.”

There have been moves made to ease the pressure, with median wage requirements for migrant workers relaxed and working holiday visas extended.

Consent woes

Another gripe highlighted in the report was the consent system. Consenting delays have negatively impacted 80% of respondents and half have experienced delays of three months or more.

“We’ve been severely affected by the increase in inspection wait times,” said Home Trends Builders director Peter de Gouw. “We’ve had inspection waits of seven weeks, which makes finishing jobs neigh impossible.”

Despite the gloomy outlook, only 31% of builders think their business will be worse off over the next 12 months.

Kelly said: “This is a sign of underlying resilience in the sector, with many having strong order books and consent numbers remaining high. There is still demand across the sector, especially so in the commercial construction sector, where the pipeline remains incredibly strong.”