Builders are likely to face financial difficulty as labour and material shortages are leading to project delays and cost blowouts, an industry leader in Queensland has warned.
As the latest survey conducted by his organisation shows that builders are facing increasing delays and cost blowouts, Master Builders Queensland Deputy CEO Paul Bidwell says it is inevitable that some builders will become either bankrupt or insolvent.
“We’ve not heard of any builders going to the wall yet, but based on what some builders and subbies are telling us, it will happen – most likely in the new year,” Bidwell said.
Bidwell’s comments come as Master Builders has released the September quarter edition of its Trade/material cost increases survey.
According to that survey, the time taken to construct a double-storey home has blown out to more than twelve months for many builders.
Meanwhile, the cost to build has skyrocketed by around 20 percent over the past year.
In particular, according to the survey:
- Many builders face long wait times for materials. Wait times for timber stand at more than two weeks for eight in ten builders and more than a month for around four in ten builders. Meanwhile, a significant number of builders are experiencing wait times of more than a month for windows, roof tiles, bricks, steel products, roofing materials and doors.
- For many builders, prices which they have needed to pay for timber, floor/wall tiles, bricks and waterproofing materials have increased by more than one quarter.
- In terms of trades, wait times for carpenters and roof installers have blown out to more than one month. Wait times of more than a month are also common for roof installers, bricklayers, glaziers, joiners, stonemasons, wall and floor tilers and structural steel workers.
- At least one in five builders report price hikes of greater than 25 percent for carpenters and concreters. More than eight in ten builders report price increases for bricklayers, electricians, floor finishers, general labourers, glaziers, joiners, painters, plasterers, plumbers, roof installers and stonemasons.
Sentiments expressed among some builders are concerning.
One builder reported lead-times for ordering supplies of between two and three months.
Another reported price increases of 60 percent over the year for structural bearers and joists.
Yet another builder reported being ‘stuffed either way’ as subbies needed to finish contract were being offered double what had previously been the case.
Being locked into contract, the builder in question was unable to match these rates.
Around Australia, builders have been confronted with trade and material shortages.
This has been driven by a combination of record levels of demand for detached home building (driven by the Commonwealth HomeBuilder program and state incentive programs), disruption to international trade and ongoing impacts on domestic timber supply from the 2019 bushfires.
This is particularly concerning as many are locked into fixed price contracts and are thus unable to pass on the cost increase in the form of increased prices without obtaining agreement to do so from the owner.
Bidwell said the implications for many builders could be dire.
He added that there was no clear or definitive solution.
“We’re particularly concerned for the small builders who don’t have the balance sheets to sustain a prolonged drain on cash flow Bidwell said.
“While opening the borders may ease some of the pressure on trades, it won’t solve our material shortages woes.”
“Unfortunately, there’s no silver bullet.”