17 August 2023
Another two liquidations rocked the building industry last week, showing the industry is still working through the fall-out of the COVID-19 pandemic and associated trade and materials shortages and cost hikes.
Media reports cited a mixture of problems that played a role in sending these well-established builders to the wall, including fixed price contracts and border closures, with one located on the border on the Gold Coast.
While we know there are builders who have worked through these issues, it’s a stark reminder that the industry as a whole isn’t out of hot water just yet. And if the Queensland Government has got anything to do with it, there’s more trouble to come.
We’re now at a critical turning point for the industry ahead of looming changes to livable housing and energy efficiency provisions via the National Construction Code (NCC) 2022, set to come into force from 1 October 2023.
These changes will see the cost to build a home go up to the tune of around $20,000 - $30,000 in Queensland (the costs will certainly vary depending on factors like the type of construction, the climate zone, topography and lot size).
While Minister de Brenni refuted our figures during the recent Budget Estimates hearing, our information comes directly from builders on the ground, who are dealing with the changes first-hand and who are best placed to provide this intelligence.
With Queensland needing more homes than ever as we face a worsening housing crisis; we’re asking a lot of an industry already facing substantial disruption and hurdles.
At yesterday’s National Housing Summit, it was agreed by all states and territories that we need to increase the supply of housing across the country. We couldn’t agree more – we know we need to be building more homes, but it comes at a time when the supply of new homes is headed in the wrong direction.
Master Builders estimates the industry in Queensland will commence 34,500 dwellings in 2022/23 – a drop of 12.3% from the previous year. Attendees at the summit agreed on a national target of 1.2 million homes over five years. Queensland’s share is approximately 20 per cent, equating to 48,000 additional homes.
However, in contrast, the pipeline of new housing is just 35,480 dwellings approved in the 12 months to June 2023.
The only bright spot is the lending data, with loans for new housing up over the past few months – but it’s too early to call this a trend, yet. Whether that translates into dwelling approvals remains to be seen.
Our forecast for 2023/24 is for the commencement of approximately 36,000 dwellings, well short of where it needs to be to meet the National Housing Summit target and a far cry from the heady days of almost 50,000 commencements back in 2016.
We welcome discussions with all levels of government on ways to address supply problems, including planning, density, land release, and infrastructure charges. But in Queensland, the priority first step must be to address the rising cost of building.
Paul Bidwell
CEO
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