Working on an interior design project in a soaring building market? It could be a challenge. Here’s why and what to do to get up and running.
RENOVATING DURING A SOARING BUILDING MARKET SERIES
We have fielded a lot of questions lately about the state of the building market. It can be a complicated issue, with many layers of complexity and possible outcomes. This has prompted us to put together our ‘Renovating During a Soaring Building Market Series’. Hopefully we’ll be able to answer some of the more common questions and put your mind at ease.
First up, let’s take a closer look at ‘What’s The Problem?’.
So, What’s The Problem?
House prices have been rising dramatically in Australia over the past few years. But it’s not just existing property that’s costing Aussies more. It’s also the cost of building new homes and units. We currently have a soaring building market. And it’s something that’s causing builders, suppliers, homeowners and countless other stakeholders sleepless nights.
But what’s causing this volatile market?
Construction Costs on The Rise
It’s no secret that construction costs are soaring. In fact, CoreLogic’s Cordell Construction Cost Index (CCCI) for Q1 2022 showed that national residential construction costs increased by 9% over the 12 months to March 2022. This is the highest annual growth rate on record since the introduction of the GST. The CCCI quarterly growth rate also reaccelerated in Q1 2022 to 2.4%, more than double that of Q4 2021 (1.1%).
The Cordell data shows that timber, metals and imported products are driving much of the rise in construction costs. And most materials, including cladding, decking, structural steel, fixings and metal components, have been affected.
Building Material Shortages
The building industry first began to experience a shortage in materials when COVID-19. Many factories around the globe were forced to close. Shipping delays began to appear. And, of course, rising fuel costs and increased shipping fees have only further contributed to the problem.
Because there were fewer factories open, those operating experienced increased demand. And this inevitably led to longer wait times and further supply shortages.
Skilled Labour Shortages
There is also a significant skills shortage within the construction industry. Border closures in recent years have led to building companies experiencing serious problems trying to hire workers from overseas. As the demand for tradies has increased, the cost of local labour has also risen. Several national building companies have also shut down amidst the pandemic.
High Market Demand
The federal government’s HomeBuilder scheme was designed to help stimulate the construction sector. Under this scheme, the government would provide qualifying Aussies with a grant towards building or buying a new home, or to substantially renovate an existing home they planned to own and occupy. This has led to increased demand for new builds and renovations. And that has increased pressure on labour and building supplies.
The Master Builders 2022 Outlook predicts that 38,000 new homes will be built in Queensland in 2022. This is an almost 20% increase on the 32,000 commenced in 2019 (pre-pandemic). Master Builders Deputy CEO Paul Bidwell said that builders face ‘enormous and unprecedented challenges’ in delivering the expected high numbers of new homes.
What Does it Mean for Your Interior Design Project?
Of course the uncertainty of a soaring building market has significantly impacted those looking to build or renovate their home or embark on an interior design project. Clients can face long delays in their projects as well as the potential for their job to run over budget.
What Does the Future Look Like?
Many experts are warning us to be prepared for the current situation to continue, particularly a shortage in building materials as supply catches up to demand.
‘Considering the record number of houses approved for construction during the HomeBuilder grant along with additional rebuild and repair work from the recent floods, demand for construction materials is likely to remain high. At the same time, supply side challenges persist. A shortage of key materials such as structural timbers and metal products along with higher fuel costs, and labour shortages, is likely to keep upwards pressure on building costs for some time yet’, says CoreLogic Research Director Tim Lawless.
While our soaring building market doesn’t sound like it’s about to settle just yet, there are some things you can do to help manage your interior design project. Look out for our next article in the series, ‘How to Prepare for a Home Renovation’ for our advice.
What Else to Expect From the Renovating During a Soaring Building Market Series?
RESOURCES TO HELP YOU GET STARTED
We’d love to chat to you about how we can ease your mind during a soaring building market. Get in touch with our expert design team at Bella Vie Interiors today.