11 August 2022
The latest Building Approvals from the Australian Bureau of Statistics show that there is still solid demand in the pipeline, but for how long is anyone’s guess.
Master Builders CEO, Paul Bidwell said that while future demand for new home construction remains strong, there is some concern amongst the industry that the situation will be short-lived.
“Despite recent interest rate hikes, loans for all aspects of new construction remain strong. Over June, loans for the construction of new dwellings grew by 19 per cent and loans across the board were still trending up over the three months. Building Approvals have also remained steady, which gives some important surety for an industry doing it tough,” Mr Bidwell said.
“Building Approvals for June 2022 saw an 8 per cent increase to units, although houses dropped by 8 per cent during the same period. Looking to the three-month trend, total dwellings approved were also up 3 per cent.”
Regional Queensland led the charge with dwelling approvals trending up across the state, while Greater Brisbane was alone in recording a fall, dropping five per cent over the three-month period. Add in strong non-residential approvals to keep the local industry busy and there remains a solid pipeline of work in regional Queensland.
“However, the real concern is what happens once the work created by the shifts in migration during the pandemic and the HomeBuilder stimulus finishes,” Mr Bidwell added.
“With cost increases to the tune of around 30 per cent over the last 12 months and no end in sight to the rising costs and shortage of materials and labour, homeowners and banks are very wary of the potential for cost blowouts during the construction phase.
“We know that some may shy away from building projects and for some, it may be a barrier altogether to affording the cost to build new or undertaking significant renovation work.
“We’re already seeing some developers put residential projects on hold and this trend does put something of a question mark over what the future holds.
“Trade and material shortages and cost hikes are impacting all sectors of the industry and while there are pockets of improvement, there is no indication that the situation will revert to more manageable levels until the back half of 2023.
“In the meantime, builders will continue to do their best to factor in the additional costs, while remaining competitive and we urge anyone with a building contract in play to keep the lines of communication open and remain patient and understanding.
“Unfortunately, we anticipate it is likely that there will be more builders who either choose to down tools or will go to the wall before the end of 2022 despite their best efforts, resulting in disappointed homeowners.”
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