Building costs soar – the problem.
If you’ve decided to undertake a renovation or build a new home recently, you’ve been in for a shock
Across Australia, building costs are soaring, driven by a jump in the price of materials and labour.
Those rises have been higher in some places, like Melbourne’s east, as one of our associates found out. Their building contract quote increased by 50% from last year to $900,000, killing off their project with no fixed price contracts being offered.
Material prices jump.
Quantity surveyors estimate the cost of building materials alone has risen by around 20% to 25% over the last year.
One of the biggest jumps has been in framing timber, now selling at $8 per metre up from $3.20 per metre a year ago.
Like other materials, the disruption to supply lines has played a part, but timber’s price surge is also a result of fires destroying plantations in Australia, the US and South America.
Analysts are predicting material prices are unlikely to fall, with most tipping a continuing if more moderate increases for the rest of this year.
Tradies are hard to find.
The other nagging problem is the shortage of tradies and skilled labourers.
That shortfall has resulted from a two pronged problem: the long term fall in the numbers of apprentices and a lack of migrant labour thanks to the international border being closed for nearly two years.
While both of these shortfalls are likely to ease over time, at the moment contractors are forced to pay top dollar for staff and sub-contractors.
And that cost goes directly into your building estimate.
Bad news for the property sector and home buyers.
These cost pressures add up to a significant economic crunch for developers, which in turn is likely to affect new unit, detached housing and the renovation sectors.
My advice is to get qualified legal and property advice before committing to a building contract.
To see more on the impact, read my next blog: Building costs soar - the impact.
Author; Miriam Sandkuhler
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