Builders in Queensland face challenges despite a positive outlook in new home construction, a key industry group has warned.

In its latest report, the Master Builders Association of Queensland says it expects the number of new home commencements to come in at 38,000 in calendar 2022.

Whilst this is lower compared with the 43,000 homes which are expected to have commenced in 2021 when final numbers come out in April, it remains above pre-pandemic levels of 32,000 homes and represents a level of activity which is healthy by historic standards.

Whilst the 2021 surge driven by the Commonwealth HomeBuilder program and the Queensland Government’s $5,000 boost in the regions is expected to subside, Master Builders says ongoing momentum is being driven by low interest rates, changed demand patterns and positive net interstate migration.

Beyond2022, dwelling commencement numbers will continue to grow as overseas migration returns (see chart).

But commercial/non-residential building activity will remain subdued as new opportunities opening up in offices, short-term accommodation, retail and industrial work are offset as a surge in social, cultural and recreational work subsides (see chart).

Moreover, Master Builders warned that ongoing supply challenges are unlikely to subside.

One such challenge involves shortages and cost increases for labour and materials – an area in which Master Builders expects difficulties to persist for the foreseeable future.

Whilst official ABS data suggests that construction costs have risen by 12.9 percent in Brisbane over the past twelve months, Master Builders says anecdotal evidence suggests that this figure may be a conservative estimate.

Indeed, it suggest that cost increases may actually be as high as 20 to 25 percent.

In addition, Master Builders says construction firms face difficulties in quarantine requirements.

On this score, it has joined other building industry groups in calling for the Queensland Government to provide critical industry status in certain situations by expanding isolation exemptions for critical construction workers who are close contacts.

“All in all, we are gravely concerned about what will happen in the first half of 2022,” Master Builders Deputy CEO Paul Bidwell says.

Unfortunately, as 2021 came to a close, the impact of price hikes and delays were highlighted, as several building businesses failed financially as a result.”

“The reality is, our industry hangs in the balance and any further delays will create more disruption and impact an industry already struggling.

There are few solutions in sight, but we are embracing any opportunity to provide the industry with relief and support that comes our way.”