It is a common misconception that builders are the ones benefitting during a construction boom while consumers get caught with increasing prices and longer wait times. This can cause some frustration however, these booms are no walk in the park for small builders let alone the larger ones.
The global economy took a hard hit when COVID-19 emerged. The pandemic caused many strains on a number of industries including residential construction. To help stimulate the economy the federal and state government announced the building bonuses. The building industry is one of the largest employers in Western Australia which meant these bonuses would help keep a large portion of the population employed. As a result, the industry had a sudden increase in activity however there have been some side effects to this sudden boom and COVID-19 has increased the strains on builders which in turn, unfortunately, gets passed on to the clients. This is a time of understanding and patience. If you are building in the current climate it is important to understand why there are delays and what is causing them.
“Builders are now experiencing a range of pressures associated with the huge levels of activity, including significant cost escalation as a result of labour shortages and material delays caused by the ongoing disruption from COVID-19 to global supply chains.”
– HIA WA Executive Director, Cath Hart
You may have already heard of the current trade shortages with an emphasis on brickies. As a result, there are many Perth builds at a standstill, ready to progress to the next stage of construction however not enough tradies around to finish the job. The shortage of brickies in particular stems from the last boom where a good number of older professionals moved over east and of those who stayed, many have retired. On top of that, there was a low intake of new apprentices in WA. As a result, the current industry boom is seeing tradies like brickies left in high demand and a lack of professionals out there to meet building needs. This is an issue both small and large building companies are struggling with. Jobs are getting delayed and on top of that, tradesmen such as brickies are hiking up their prices.
The building industry is currently battling with material shortages such as steel. Iron ore is being sold to China at high prices however is coming back in steel form at equally high prices and we are not getting enough of it to keep up with demand. Timber is another material that is in high demand with shortages being experienced globally as a result of fires in both America and Australia as well as the shutdown of timber plants thanks to COVID-19. There are efforts in place to try and tackle the wood shortage. The Australian Government has allocated $15.1 million to help tackle timber shortages with aims to salvage bushfire affected softwood from Kangaroo Island.
All these shortages are normal during a boom period however with the added pressure of the pandemic these constraints are even more difficult to workaround.
While you may be thinking builders are the ones to benefit from the booms this is not always the case. Yes, there are more projects available however with tradies and suppliers hiking up their costs and delays in supply, builders are having to struggle to keep costs down for their clients, coordinate labour delays with material shortages and receive progress claims to ensure cash flow.
“From the builder’s point of view, especially where you have a lump sum contract, it’s fixed at the top end so you can’t necessarily increase that.”
– HIA WA President, Dean Humphrey (Building WA Podcast)
So how is Jubilee Home Builders managing these obstacles? We believe transparency and communication are key. We are communicating openly with our clients on cost expectations and are trying our hardest to keep our clients within their budget. We are also creating realistic timeframes and are working with our tradesmen closely so we can communicate labour delays.
The prospect of building with the current trade and supply shortages may sound offputting however these obstacles are no reason to delay building your dream home/development plans and capitalising on low-interest rates during construction. With the right builder to guide you through the process, you can build with minimal stress and surprises. If you are thinking of building your next home or developing land in the near future get in contact with our team today.
Contact us on:
08 9571 3512