Homes out of range as costs soar

THE biggest constraint for Townsville builders’ success and profitability is the growing cost of labour and materials.

According to the Master Builders Survey of Industry Conditions for the March 2018 quarter, although the Townsville region as a whole experienced improved conditions, this was tempered by the residential and non- residential sectors reporting weak conditions.

“This is expected to stabilise in the near future with turnover, profitability and contract prices all stable,” the report states. “The challenges caused by high labour and material costs are reaching a critical level.”

Master Builders regional manager of North Queensland Melissa Coulter said it had been “a tough few years for new- home builders in Townsville”.

“We know everything is a cycle and Townsville is probably the last area in Queensland to really feel that tight feeling, especially in residential new- home market,” she said. “Obviously in the commercial sector we have seen some green shoots with work starting on some major projects such as the NQ Stadium and other major projects.

“With those larger projects comes confidence in the region that Townsville is going to be OK and will get through this hard time.”

Ms Coulter said she expected the residential building market to take 12 months for any significant upswing.

“It won’t be the whole spike we saw in 2006 and 2007, where we saw the boom hap- pen,” she said. “I think we will see gradual improvement and, for the residential market, it will take another 12 months to really start to see momentum.”

Master Builders deputy CEO Paul Bidwell said builders were responding to the affordability challenge by squeezing margins, often to “razor- thin levels”.

“These practices are not sustainable. We need to find new ways to drive down, or at least contain, the cost of new construction,” he said. “If it continues to rise, we will begin to push Queenslanders out of home ownership.”

Mr Bidwell said rising building costs were attributed to many factors, several of which were 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,” he said.