‘Do your homework before dream pad’
AN experienced construction boss is warning Gold Coasters planning their dream home to do due diligence to ensure their builder “is not about to go broke”.
And for those waiting for prices to drop before starting a build, he’s urging them to get in quick because it is likely costs will never return to preCovid levels.
“It’s not about fear mongering, it’s about a perfect storm of problems that are affecting the construction industry,” said Mike Mellare, of Ormeau-based Complete Home Extensions.
“Prices have gone through the roof, not just of raw materials but of every single thing relating to the building industry. Material costs have skyrocketed by at least 50 per cent, and more in some cases. Once prices go up, they never come down.”
Mr Mellare said a simple yet essential piece of timber used in every build had gone from a trade price of $2.07 plus GST in 2020 to $5.73 plus GST in November.
“A piece of 240x40m pine that was $13 a metre a year ago is now $18. When you’re buying thousands of them the extra cost adds up.”
Mr Mellare said as an established business, his company was financially sound and booked solid with jobs for the next nine months.
“We’ve been able to effectively manage the Covid storm, but there are lots of others struggling. A lot more are about to go out the back door.”
The cost of a new build on the Gold Coast was about 20-30 per cent more than in 2019. A renovation that cost $167,000 in 2020 was now $220,000, solely because of soaring supplies.
“And that’s just us trying to survive, not trying to make a lot of money,” Mr Mellare said. “It’s a means of survival, I’ve never seen anything like it in my lifetime.
“Mentally, it’s taking a toll, particularly as blokes, particularly those my age (70) don’t talk about mental health issues as much.”
Mr Mellare’s warning comes on the back of the collapse of Underwood-based building giant Privium in November. The former Top 20 builder of detached homes in the country left about 160 unfinished homes in Queensland, with subbies reportedly owed more than $20m.
Another struggling major Queensland builder tried to buy themselves out of signed
house contracts, offering customers $15,000 for them to not build their homes because of the slim profit margin they would make. One industry source told the Bulletin up to 150 customers were offered the deal, but only a handful accepted it.
Meanwhile, the building
regulator is under fire for suspending the licences of 2640 contractors, most of whom are struggling small business owners.
The move took place in November and targeted small business owners for “failure to comply with minimum financial requirements”.
The majority had annual turnover of less than $800,000 and have been hard hit by significant pressures stemming from trade contractor and supply shortages.
By comparison, in the last financially year similar action was taken against just 66 operators.