The cost of building a new home has skyrocketed by $80,000 since the pandemic, as the sector has been hit by rising material costs, supply chain disruptions and labor shortages.
Overall, the cost of building an average new home has ballooned to $400,000, new data from the Australian Bureau of Statistics (ABS) has shown.
Many construction companies have lost “a lot of money” in the last 12 months due to an “exponential increase” in prices, between 15 and 50 percent, according to Russ Stephens, co-founder of the Association of Professional Builders.
It has led to the collapse of a number of construction companies, often leaving a trail of millions in debt.
Meanwhile, a construction expert, who works for one of New South Wales’s largest construction companies, previously warned in May that the situation in the industry was only “going to get worse” after construction companies continued to sink.
It revealed that the price of home construction had skyrocketed to between $40,000 and $100,000.
Stream more business news live and on demand with Flash. More than 25 news channels in 1 place. New to Flash? Try 1 month free. Offer ends October 31, 2022 >
Hugh Hartigan, head of research for the National Housing Finance and Investment Corporation, said wood, plywood and wood windows have increased by more than 30 percent over the past year.
But the ABS data also revealed a chilling result for departments.
It showed a collapse in approvals for new apartment projects to a decades-low, and economists warned that massive interest-rate increases and sky-high prices had made property developers wary.
There were just 3,439 approvals for multi-housing projects last month, down 44 percent from June and down 43 percent from a year earlier.
By comparison, 9,937 detached homes were approved for construction in July.
Private sector apartments saw a “dramatic” 43.5 per cent drop in approvals, especially large complexes, added Dr. Brendan Rynne, chief economist at KPMG.
“Apartment approvals are much more volatile and tend to reflect the cyclical challenges associated with the construction industry, such as the economic slowdown, declining migration, labor shortages, and limited project funding available at a later date. reasonable cost,” he said.
“All of these challenges, plus the highest construction consumer price index and the lowest unemployment rate in decades, make multi-home construction particularly challenging right now.
“This is being reflected in the lack of new projects that are presented in the sector.”
Dr. Rynne warned that the drop in housing supply would be bad news for renters.
“On the one hand, this will put upward pressure on rents and the consumer price index, which will be of concern to the Reserve Bank of Australia as it considers how much interest rates need to rise for inflation to rise.” return to the target range.” he said.
“On the other hand, the lack of supply will support house prices in the face of rising interest rates and support a change in house prices at some point in the future.”
Overall, the ABS figures showed there was a 17.2 percent decline in building approvals across the country.
“Every state saw a decline except for South Australia. WA experienced the largest drop in building approvals,” said Dr. Rynne.
“The disruption of interstate migration caused by prolonged border closures is potentially one of the reasons supply is retracting to an even greater degree in the West than in the eastern coastal states.”
But Australia’s housing industry economist Tom Devitt said home building approvals had not yet reflected the full impact of higher interest rates, which had already hit home sales.
“The strong volume of house approvals in recent months reflects the significant volume of new homes in Australia that were sold earlier in the year, but have not yet been approved,” he said.
House approvals reached an all-time high of nearly 14,300 in March 2021 after the government introduced construction grants.
Leave a Reply