Australia’s new home building speeds are set to drop due to a number of factors, including labour shortages and local council delaying approvals for new builds.
A number of builders are fed up and are leaving the industry. According to The Australian, new house sales are down by 75 percent on the eastern seaboard, with builders charging up to 20 percent more for construction costs to make profits. Banks have cut back loan amounts by 10-15 percent, making it even more difficult for those looking to build or buy. It is expected that the federal and state governments will also feel the pinch, due to less revenue from land tax, stamp duty and council rates.
The newspaper reports that state governments and local councils are intentionally delaying housing developments through referring applications to external consultants and entities. These entities are imposing huge costs and delays on proposals. Skills and supplies are also at a minimum and may take up to a decade to correct. As a result, labour costs are increasing at a rapid rate.
Public projects are keeping construction workers in the industry, despite some heading for the exits. The Australian claims that local councils that have pushed housing prices up due to delaying of approvals are now having to rectify issues through the development of social and public housing.
Builders who signed contracts in the years previous are locked into fixed prices, which hurt their bottom line. Many of those developments have come to a standstill, with homeowners and builders at loggerheads because the fixed rates result in a loss for many construction companies.
What is being felt across housing developments is also occurring amongst multi-residential builds. The only difference between the house and apartment market is the demand for luxury units in exclusive areas.
Homeowners who try to increase the price will see their properties constructed quicker, given builders have a vested interest in finishing a house that has reached over 50 percent completion, but should be mindful of the timeframe between payment and work occurring.
The Australian reports there is a general consensus amongst builders that they will finish the projects they signed on for and subsequently quit the industry. The rate of houses built in Australia will plummet in recent years, as will the demand for money to be lent by banks for new homes.
