Rising material and labour costs putting builders under pressure

THE growing cost of labour and materials has long been a constraint on Queensland building businesses.

But, according to Master Builders’ Survey of Industry Conditions for the March 2018 quarter, it is now, by far, the largest constraint for business success and profitability for every region across Queensland.

In fact, more than 95 per cent of survey respondents reported it as being a major or moderate constraint; a figure that Master Builders Deputy CEO Paul Bidwell, says is of great concern.

“Builders are responding to the affordability challenge by squeezing margins, often to razor-thin levels,” Mr Bidwell said.

“These practices are not sustainable: we need to find new ways to drive down, or at least contain, the cost of new construction.

If it continues to rise, we will begin to push Queenslanders out of home ownership.

“For a home buyer, especially in the regions, a cost hike may be the difference between being able to secure a mortgage and not.

“It can potentially inhibit Queenslanders who are already grappling to enter the market.

The rising costs are attributed to many factors, several of which are out of builders’ control.

“There are reports that anywhere between 20 and 40 per cent of the cost of a new home is made up of government taxes, duties, levies and charges.

“That’s why we’re calling on the Queensland Government as it finalises its budget to consider the role it plays in adding to the cost of construction.”

The report also found thatQueensland residential conditions remained muted and while the non-residential sector continues to struggle, there was an increase in reports of more stable conditions.

However, builders are confident that things will look up in the future, with turnover, profitability and contract prices all being reported back as stable.