Real Estate FROM COAST TO COUNTRY
House building costs rise and rise By Madeleine Murray
THE HOUSE-building industry has sailed into the perfect storm of disasters. Everything has conspired to drive costs up exponentially in the past two years which is good news if you are trying to sell an established home. First, there was COVID when everyone learned the meaning of supply chain. For months there was no pine in the timber yard, no glue for the tiles, no parts for the pump, or computer chips for the smartphones and laptops. Then the war in Ukraine (and subsequent price gouging by oil companies who have been raking in record profits), caused the price of fuel to increase drastically, and with it everything that was transported, which is pretty much everything, ultimately. Floods created a surge in demand for labour and materials. Catastrophic bushfires caused councils to tighten building regulations in high-risk fire zones. One couple that lives in a highflame area found it would cost
them almost $1.5 million to build a house with double-glazed windows, and double-brick walls. A local businessman put in a DA 13 months ago, to extend the premises behind his business. “The DA was approved after 13 months, at the cost of over $120,000. In that time, the building material prices went up exponentially,” he told The Weekly. “We had a budget of $900,000 about 18 months ago. Now it’s $1.5 million, and rising. “No builder will accept a fixed price contract these days, they are all cost-plus. But most banks don’t lend to a cost-plus, they want a fixed-price contract.” “Concrete went up dramatically, steel in some cases had gone up 500 per cent. “Labour has gone up at least 50 per cent, and it’s so hard to get. Some tilers are charging $1000 a day.” According to CoreLogic’s Cordell Construction Cost Index, residential construction costs increased by 11 per cent over the 12 months to September. CoreLogic Construction Cost Estimation Manager John Bennett
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said the Cordell costing team was continuing to see costs rising, especially across timber and metal materials, which was affecting framing and reinforcing. “In particular we are recording significant volatility in prefabricated framing,” he said. “The range of products affected by higher building material costs is only growing, with many suppliers having little choice but to pass on price increases. “This quarter has also shown a larger increase in the cost of wall linings, including plasterboard and fibre cement, which
previously had been relatively stable. “It will cost you more to get into your house too, with the price of doors showing a sharp rise in the last quarter.” The spiralling cost of raw materials, labour, and fuel has driven prices up, as have all the indirect effects of the war in the Ukraine. Even waste disposal fees have risen this year. All these increases have a flow on effect to the last person in the chain, the person building or renovating a house.
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Mr Bennett said the industry is facing significant additional challenges each quarter, with suppliers having dealt with the impact of rising fuel, freight and electricity to their bottom line for more than 18 months. “A shortage of labour and more expensive overheads continue to have a bearing on the industry,” Mr Bennett said. “Its impact on the residential construction industry has not been lost with ongoing delays to completion times and a blow out to builders holding costs during a period of market change.”
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