Rising building costs and labour shortage threaten housing supply, says Harry Triguboff
The rising building costs and labour shortage are hampering the apartment supply, says Meriton Founder and Managing Director Harry Triguboff. Construction costs have risen 20% and are expected to rise more due to the global supply chain disruptions caused by the pandemic, and prices of key building materials such as steel-related material have risen as much as 60%, according to Australian Institute of Quantity Surveyors.
With developers and builders on the receiving end of the ever-increasing constructions costs, Mr. Triguboff says it is bad news for the industry, “Builders will go broke because they quoted a building job a few years ago and then presales were made to get finance, but the construction costs have skyrocketed since.” It will also make the 42,000 new built homes per year goal outlined in Treasury’s NSW Intergenerational Report to meet the housing demand very challenging.
In addition to the rising building costs, skilled labour shortage is also threatening the housing supply. Mr. Triguboff says the labour force is tight and builders can’t find workers which will further delay construction. According to HIA, labour shortage in the construction industry has become a common occurrence in all Australia, as all regions are struggling to find skilled workers and all trades are in short supply.
Mr. Triguboff says these factors will further stifle the housing supply, despite the reopening and easing of restrictions on construction sites, and push up the value of existing stock.