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Waiting on a tradie? You could be waiting a lot longer

HIA chief economist Tim Reardon said record low interest rates, coupled with home buyers’ desire for a bigger property during COVID-19, had created a rush for new home builds and renovations over the past two years.

“Builders will be at capacity throughout this year and well into 2023,” Mr Reardon said. “There’s still challenges with land, labour and materials [affecting the industry].”

The Association’s figures show 125,000 houses are expected to begin construction this year across Australia following a record 149,000 in 2021.

Those figures don’t include other dwellings such as apartments, which would push residential construction numbers even higher.

Mr Reardon said while the federal government’s HomeBuilder grants, aimed at keeping house construction going during the worst of COVID-19, had created an initial spike in house builds, there had been another boost after the grants ended.

Adding to the challenges, tradies were also playing catch-up on older builds, Mr Reardon noted, with lockdowns in 2020 and 2021, and difficulties getting building materials thanks to COVID putting residential projects behind schedule by between three weeks and five months last year.

That included home renovation projects, which also boomed over the past two years, especially as more owner-occupiers bought fixer-uppers to enter the market in more expensive suburbs.

Renovators were having to wait up to two years for the necessary trades, an analysis of data showed.

“One of the unique features of this boom is that rarely do we see a renovations and housing boom at the same time – that’s also happening in all states across Australia,” Mr Reardon said.

High demand for tradies has added more pressure to those already working in difficult circumstances, especially as the Omicron strain of COVID-19 spreads.

Owner of Officer Plumbing Services in Melbourne’s southeast, Chris Hunter, said he had already had jobs affected by Omicron.

“I was supposed to do a job for a bathroom, but the stonemason got COVID, so it delayed the project,” Mr Hunter said.

Mr Hunter is working 30 to 40 jobs per week, including renovations and maintenance work, sometimes not finishing until past 9 pm.

“I’m fairly new, I’ve had this business for four years, and I’ve gotten busier - from the second to the third year there’s been a massive jump in work, and it’s busier again this year.”

With people continuing to work from home, using their toilets and taps more, urgent jobs were coming up more often, meaning it was harder for him to take on jobs where he was required for longer than a day.

Mr Hunter hired an apprentice in 2020 to help out, and is now looking for another plumber to join the business, but even that is proving difficult because of the tradie shortage.

The problem was being exacerbated by tradies who were not getting vaccinated.

Mr Hunter estimated 15 per cent of tradies had not had their required jabs to work, with the Australian Council of Trade Unions secretary Sally McManus estimating that it was close to 10 per cent in 2021.

Tradie shortage issues come at a time when soaring building costs are also hitting the industry.

Timber costs are blowing out, adding to the cost of building a home, CoreLogic data shows.

New data released by CoreLogic shows that national construction costs had increased by 7.3 per cent over 2021, the highest annual growth rate since March 2005.

The Cordell Construction Cost Index showed construction costs had risen most in South Australia and Western Australia, where the cost of building a home jumped by 7.9 per cent over the year.

CoreLogic research director Tim Lawless said the data showed higher costs were being driven by an increase in timber prices, with metal costs still volatile.

“With such a large rise in construction costs over the year, we could see this translating into more expensive new homes and bigger renovation costs, ultimately placing additional upwards pressure on inflation,” Mr Lawless said.

Source: Domain

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Tradie shortage leaves renovators waiting up to two years

Homeowners planning to renovate may have to wait until next year to get their projects started and risk paying a premium, as the shortage of skilled tradies looks set to worsen amid surging demand for renovations and new detached homes.

An analysis of 252 residential building companies by the Association of Professional Builders (APB) has found members have been signing contracts at record levels the past six months and many are booked out for the next two years.

Sydney home renovator Jo Freeman struggled to find tradies to do her backyard renovation. Peter Braig
“We’re finding that a lot of our members are already fully booked until the end of 2021, and some until 2022, whereas this time last year, they might have only been booked a month or two in advance, and they were always chasing the next bit of work to plug the gaps,” APB founder Russ Stephens said.
“The housing stimulus has created more demand than ever, it’s absolutely unprecedented. Builders are all fighting over a limited number of subcontractors and now more worried about securing enough tradies to deliver the projects, than winning more work.”

Adelaide custom homebuilder Stannard Family Homes director Ryan Stannard said they have to take on more staff to cope with the extra work, including an additional supervisor.

“It’s going nuts. The only thing that can stop it at the moment is the government lockdowns,” he said.
But there may not be enough tradies to go around.

The Housing Industry Association Trades Availability report for the December quarter showed the index dropping to -0.35, indicating a shift to a significant shortfall of skilled labour across all states and territories amid the large flow of work entering the pipeline.

This comes as renovation activity across the country is expected to hit its highest level in 20 years. HIA forecasts renovation projects to jump by 3 per cent between 2020 and 2021 to reach $38.6 billion.
“All indications are that this will continue into 2021 as international travel is not expected to return until at least 2022,” said Tim Reardon, HIA chief economist.

Renovation costs set to rise

While the cost of skilled tradies is yet to fully reflect this tightening market, the lack of competition will drive building and renovation costs higher says Marty Sadlier, MCG Quantity Surveyors director
“On average, we’re seeing a 10 to 15 per cent increase in renovation costs,” he said.

“The largest issue at the moment is the prolonged timeframe for works to commence and scarcity of the tradies. The demand is far too high.”

It’s an issue Sydney homeowner Jo Freeman experienced first hand. She was hoping to get a simple backyard upgrade within two weeks, instead, it took her three months just to find tradies and paid more than she expected.

“I called all the tradies recommended to me and anyone I could find online, but only four came around, who then quoted me $25,000 to $30,000 to do the paving and install a garden bed. I never heard back from them again,” she said.

She eventually found someone who charged her $18,000 for the labour alone. Now she’s worried about embarking on a bigger renovation.

“I’m freaking out about my bigger renovation, because I plan to gut my terrace and install a new staircase. I’m worried that I can’t get good builders to do it within my budget,” she said.

“I get the feeling that builders don’t like doing renovations at the moment and they prefer to build a new home.
“The $800,000 they’re quoting is also exorbitant,” she continued, referring to the quotes she has received for the work on the terrace and building a new staircase.

Perth-based investor Catherine Lezer took 12 months to complete her renovation due to the lack of available tradies. 

After buying a 1974 house in Kalamunda, WA, in February last year, she hoped to get the property renovated and listed for sale by September. Instead, it took her a year to get the renovation completed.
“Waiting for the plumber was the biggest hurdle for the renovation moving smoothly,” Ms Lezer said.

“We didn’t finish until the end of December, and a few items were further delayed, meaning the property wasn’t ready until February this year. COVID-19 takes some of the blame, as does supply issues, but the biggest cause of the delay was waiting for tradies.”

Source: Nila Sweeney

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Timber imports responding to record housing demand

24 Feb 2022

“International trade data released today by the Australian Bureau of Statistics shows that global supply chains are gradually meeting the demands of the pandemic,” added Mr Devitt.

“In the final quarter of 2021, the value of select wood imports reached their highest level on record, as part of the continuing trend from mid-2020.

“Timber is predominantly produced domestically but excess demand, such as in a boom year like 2022, is largely sourced from overseas markets.

“Supply chain developments like this will help ease pressures in home building and the broader economy.

The Australian Bureau of Statistics today also released its monthly building approvals data for detached and multi-units covering all states and territories.

“Multi-unit approvals were up by 17.9 per cent in 2021, recording almost 78,000 approvals for the year.

“This is an encouraging sign that apartment construction will return prior to the return of overseas migration.

“Building approvals for detached housing also remained elevated at the end of 2021 to produce the strongest year on record. 

“There were over 150,000 approvals for detached homes 2021, 26.0 per cent up on the previous year and 11.0 higher than the previous calendar year record set in 1988.

“Detached approvals were up for the year in all jurisdictions.

“This is consistent with the strength seen in other indicators, including housing finance and HIA’s own new home sales survey.

“The value of renovations approved also remains elevated. The last 12 months has seen $12.4 billion worth of renovations approved, an increase of 33.3 per cent on the previous year. 

“This boom is set to keep builders busy this year and into 2023. The main constraint facing builders this year will continue to be the price and availability of land, labour and materials.

“Properly functioning supply chains will go a long way towards helping to ease these pressures,” concluded Mr Devitt.

In seasonally adjusted terms, total residential building approvals increased in 2021 compared to the previous year in New South Wales (+32.1 per cent) and Victoria (+2.5 per cent), while declining in Queensland (-14.8 per cent), Western Australia (-7.7 per cent), Tasmania (-7.4 per cent) and South Australia (-0.3 per cent). In original terms, building approvals increased in the Australian Capital Territory (+136.5 per cent) and decreased in the Northern Territory (-31.7 per cent).

Source: Housing Industry Association