Innovating for affordability
THE building industry is exploring how innovation can assist efforts to improve the cost of housing as affordability remains a major issue for the community and governments.
Speaking this week about the challenges for the housing sector in 2015 at the Australian Green Development Forum in Brisbane, Master Builders deputy executive director Paul Bidwell said much of new housing stock was currently produced at price points that many people, particularly first home buyers, cannot afford.
“Aro u n d 9 0 p e r c e n t o f homeowners buy established homes. Builders face an ongoing battle to shift homebuyers from established to new construction,” Mr Bidwell said.
“The rising cost of land, size and quality of new homes and government regulations are all impacting affordability. Clearly, builders can control only a fraction of the problem.
“The housing sector’s response to date has generally been around improving business effectiveness and different products – smaller houses on smaller lots (in addition to putting pressure on governments to reform the regulatory environment).”
Master Builders believes there is an imperative for the sector to identify new and improved products, processes and systems that will help drive down the cost of building.
In its latest productivity report, the OECD predicted that i nnovation would lif t productivity by 62 per cent.
However, recent studies from Queensland University of Technology, the National Housing Supply Council and the Australian Housing & Urban Research Institute have confirmed that innovation isn’t the housing sector’s strong suit.
While materials manufacturers are investing in new materials and products, there isn’t a lot of uptake from the housing construction sector.
In addition, Master Builders’ own research into this issue discovered an interesting lack of urgency among builders.
There is a prevailing view that off-site manufacturing and modern methods of construction are the next step to increasing affordability and business profitability.
But to date, there has been lit- tle movement towards these by the industry.
The research suggests that this is not likely in the near future either, despite the long history of discussion concerning the industrialisation of housing production and some experimentation with off-site factory production.
“There are many barriers, not the least of which is the conservative culture of the industry,” said Mr Bidwell. “Changes around construction processes and materials carry plenty of financial risk without strong evidence of cost savings and consumer acceptance.
“For companies building less than 100 dwellings a year, these alternative construction methods are not viable.
“This equates to more than $25 million annual turnover.
“The reality is that 85 per cent of licensed building contractors have an allowable annual tur nover of l e ss than $600,000.
“This is the maximum figure – not necessarily actual turnover, which highlights that the building industry is predominantly comprised of small businesses.”
In a bid to help assist innovation in the industry, Master Builders is keen to work with the state government to encourage the uptake of new construction materials and methodologies to reduce completion times, drive down costs and help address housing affordability.
“The trick is to get to the smaller builders spread across Queensland,” Mr Bidwell said.
“That, in my view, is a tough nut to crack.”
CHANGES NEEDED: Master Builders deputy executive director Paul Bidwell says the industry must explore innovation to improve affordability.