Home builders

New home builders to be penalized as construction costs increase largest in years | Newcastle Herald

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New home builders and renovators across Australia are in an unenviable position, with the cost of construction rising at its fastest rate in more than 20 years and predictions that the situation will not improve for another 12 at 18 months. An increase in new construction and renovation projects, supply chain disruptions and a shortage of building materials and labor are all to blame for a 3.8% increase in construction costs over the course of of the September quarter, CoreLogic said. This is the largest quarterly increase recorded since 2000, when costs rose 7.2 percent after the introduction of the GST. “The quarterly growth rate in construction costs is happening everywhere and is not just confined to one city or state, it is a national trend,” he said. GST-related structural adjustments aside, the latest figures represent the “biggest quarterly change on record,” Lawless said. The annual growth rate was also at its highest level since March 2005, with costs rising 7.1 percent in the 12 months leading up to September. Part of the problem is that there are too many houses waiting to be built and too few people to build them, Mr Lawless said, which is bad news for anyone about to start a new project. “For anyone looking to build or remodel, or for someone who owns a business involved in the home construction industry, this means they are all likely to be faced with much higher costs,” he said. Mr Lawless said. Part of the reason for the surge in demand could be attributed to federal government homebuilder subsidies, while the closure of international borders created problems in the labor market. “This inflation of construction costs could continue for another 12 to 18 months. It is unlikely that the industry will be able to absorb such a large increase in costs into its margins and higher construction costs will ultimately be passed on to the consumer,” putting further upward pressure on the price of a new home or renovation, “Lawless said. Growth in construction costs has been fairly uniform across the country, although costs have increased the smallest to Victoria, at 3.5 percent, and the highest in South Australia, up 4.4 percent.