Amidst the rising housing demand in an environment of labour shortages and supply chain challenges, Brad Duggan, CEO of Australia's biggest home builder, Metricon underscores the importance of stability in easing the pressure on Australia’s construction industry, which is just coming out of a turbulent period following the pandemic.
Metricon, which successfully rode out a looming crisis facing the company in the recent past, was named Australia’s No.1 home builder in the HIA COLORBOND Steel Housing Top 100 for the eighth consecutive year – an achievement that Duggan says is a testament to the work they have done over the last two years, “delivering for our customers, and getting into that better well-priced book of work”.
Metricon is targeting 4,500 new homes this year, and is focused on medium density town living as well as social and affordable housing. But would the company like to build more given the current constraints?
Duggan believes that the macroeconomic environment is quite strong with a lot of demand for housing. However, it’s also important to match delivery with the company’s capacity and capability. “The one thing we've learnt over the last two years is to deliver for our customers. So while we'd love to deliver more, we need to make sure we don't take on or bite off more than what we can chew,” he says.
1.2 million new homes by 2029
On the Australian Government’s formidable target of building 1.2 million new homes by 2029 to tackle the country’s massive housing crisis, Duggan says volume builders have a massive role to play in achieving the ambitious numbers. While crediting the government for trying to push the industry forward, he observes that supply of labour and the depth of skills remain a challenge.
“These people who build our homes, they're professionals. These are not skills that can be learnt overnight. So if we're going to get up to these lofty goals of how many homes we want to build, we really need to start investing in that labour force now. And it's going to take some time to rebuild it back to where it needs to be,” he says.
“No peaks and troughs, we just need stability”
Given the constraints around labour and supply chains, Duggan worries that the massive pent-up demand for housing arising out of high interest rates could explode when the interest rates start to come down. Which is why the government should provide some direction ahead of interest rate changes to maintain stability.
“If there is a decrease in interest rates, and it comes without any signalling, it's going to put a significant amount of pressure on the supply chain and create some inflationary pressure for customers. I want there to be clear signalling that it looks like we're at the top of that cycle of interest rates increasing, so that people can start to work out what they can afford,” he explains.
“It takes a lot now for people to take that leap of faith to build a home, and that's where the Reserve Bank has a role to play, just to signal what the direction of interest rates is going to be.”
For more, go to our podcast with Brad Duggan here.
Image: Supplied
